[House Hearing, 108 Congress]
[From the U.S. Government Publishing Office]
TOOLS FOR ENHANCING SMALL BUSINESS
COMPETITIVENESS IN THE DALLAS AREA:
A REVIEW OF FEDERAL PROGRAMS
=======================================================================
FIELD HEARING
BEFORE THE
COMMITTEE ON SCIENCE
HOUSE OF REPRESENTATIVES
ONE HUNDRED EIGHTH CONGRESS
SECOND SESSION
__________
JANUARY 23, 2004
__________
Serial No. 108-39
__________
Printed for the use of the Committee on Science
Available via the World Wide Web: http://www.house.gov/science
U.S. GOVERNMENT PRINTING OFFICE
91-365 WASHINGTON : DC
____________________________________________________________________________
For Sale by the Superintendent of Documents, U.S. Government Printing Office
Internet: bookstore.gpo.gov Phone: toll free (866) 512-1800; (202) 512�091800
Fax: (202) 512�092250 Mail: Stop SSOP, Washington, DC 20402�090001
______
COMMITTEE ON SCIENCE
HON. SHERWOOD L. BOEHLERT, New York, Chairman
RALPH M. HALL, Texas BART GORDON, Tennessee
LAMAR S. SMITH, Texas JERRY F. COSTELLO, Illinois
CURT WELDON, Pennsylvania EDDIE BERNICE JOHNSON, Texas
DANA ROHRABACHER, California LYNN C. WOOLSEY, California
JOE BARTON, Texas NICK LAMPSON, Texas
KEN CALVERT, California JOHN B. LARSON, Connecticut
NICK SMITH, Michigan MARK UDALL, Colorado
ROSCOE G. BARTLETT, Maryland DAVID WU, Oregon
VERNON J. EHLERS, Michigan MICHAEL M. HONDA, California
GIL GUTKNECHT, Minnesota BRAD MILLER, North Carolina
GEORGE R. NETHERCUTT, JR., LINCOLN DAVIS, Tennessee
Washington SHEILA JACKSON LEE, Texas
FRANK D. LUCAS, Oklahoma ZOE LOFGREN, California
JUDY BIGGERT, Illinois BRAD SHERMAN, California
WAYNE T. GILCHREST, Maryland BRIAN BAIRD, Washington
W. TODD AKIN, Missouri DENNIS MOORE, Kansas
TIMOTHY V. JOHNSON, Illinois ANTHONY D. WEINER, New York
MELISSA A. HART, Pennsylvania JIM MATHESON, Utah
J. RANDY FORBES, Virginia DENNIS A. CARDOZA, California
PHIL GINGREY, Georgia VACANCY
ROB BISHOP, Utah VACANCY
MICHAEL C. BURGESS, Texas VACANCY
JO BONNER, Alabama
TOM FEENEY, Florida
RANDY NEUGEBAUER, Texas
C O N T E N T S
January 23, 2004
Page
Witness List..................................................... 2
Hearing Charter.................................................. 3
Opening Statements
Statement by Representative Nick Smith, Acting Chairman,
Committee on Science, U.S. House of Representatives............ 8
Statement by Mr. Jim Barrish, Director of Technology Assessments
Program, Bill J. Priest Institute.............................. 8
Statement by Dr. Glen Downs, President, Bill J. Priest Institute. 8
Statement by Representative Eddie Bernice Johnson, Member,
Committee on Science, U.S. House of Representatives............ 10
Witnesses:
Mr. Joseph Montes, Administrator of Region VI, Small Business
Administration, Dallas, Texas; accompanied by Mr. Lavan
Alexander, District Director, Dallas-Fort Worth, Small Business
Administration
Oral Statement............................................... 11
Written Statement............................................ 13
Ms. Jo Anne Goodnight, Program Coordinator, Office of Extramural
Research, National Institutes of Health, U.S. Department of
Health and Human Services, Bethesda, Maryland
Oral Statement............................................... 15
Written Statement............................................ 18
Biography.................................................... 25
Dr. Da Hsuan Feng, Vice President for Research and Graduate
Education, Professor of Physics, University of Texas at Dallas
Oral Statement............................................... 26
Written Statement............................................ 27
Biography.................................................... 29
Dr. Robert E. Slocum, Chair and Chief Technical Officer,
Polatomic, Inc., Richardson, Texas
Oral Statement............................................... 31
Written Statement............................................ 33
Biography.................................................... 36
Dr. Oliver J. Murphy, President, Lynntech, Inc., College Station,
Texas
Oral Statement............................................... 37
Written Statement............................................ 38
Biography.................................................... 48
Financial Disclosure......................................... 49
Discussion....................................................... 50
TOOLS FOR ENHANCING SMALL BUSINESS COMPETITIVENESS IN THE DALLAS AREA:
A REVIEW OF FEDERAL PROGRAMS
----------
FRIDAY, JANUARY 23, 2004
House of Representatives,
Committee on Science,
Washington, DC.
The Committee met, pursuant to call, at 10 a.m., in the
Bill J. Priest Institute Conference Center, Room 2200, Dallas
County Community College, Dallas, Texas, Hon. Nick Smith
[Acting Chairman of the Committee] presiding.
FIELD HEARING CHARTER
COMMITTEE ON SCIENCE
U.S. HOUSE OF REPRESENTATIVES
Tools for Enhancing Small Business
Competitiveness in the Dallas Area:
A Review of Federal Programs
FRIDAY, JANUARY 23, 2004
10:00 A.M.-12:00 P.M. (CST)
BILL J. PRIEST INSTITUTE CONFERENCE CENTER
DALLAS COUNTY COMMUNITY COLLEGE
DALLAS, TEXAS
1. Purpose
To increase awareness of the Small Business Innovation Research
(SBIR) Program and the Small Business Technology Transfer (STTR)
Program, and to learn more about the opportunities that these programs
offer to small businesses, especially those owned by minorities and
women, in the Dallas area.
2. Witnesses
Mr. Joseph Montes is Administrator of Region VI for the Small Business
Administration (SBA) in Dallas, Texas. Mr. Montes will be accompanied
by Mr. Lavan Alexander, District Director in the Dallas-Fort Worth area
for the Small Business Administration.
Ms. Jo Anne Goodnight is Director of SBIR and STTR for the National
Institutes of Health (NIH) in Bethesda, Maryland.
Dr. Da Hsuan Feng is Vice President for Research and Graduate Education
and Professor of Physics at the University of Texas at Dallas.
Dr. Robert Slocum is Chairman and Chief Technical Officer for
Polatomic, Inc, an energy company based in Richardson, Texas.
Dr. Oliver Murphy is President of Lynntech, Inc. of College Station,
Texas.
3. Overarching Questions
The hearing will address the following overarching questions:
In what ways are the SBIR and STTR programs designed
to be of assistance to small businesses that wish to do
research and develop innovative products either for the
government or the private sector?
What is the University of Texas at Dallas doing to
assist high technology small businesses and how does this
relate to the work of the Small Business Administration?
What is the track record of the SBIR and STTR
programs in the Dallas area, including with minority and women-
owned businesses, and what is being done to enhance the
program's relationship in the area and with under-served
populations?
4. Appendix
Small Business Innovation Research Program, Congressional Research
Service Report, December 5, 2003
Summary
In 1982, the Small Business Innovation Development Act (P.L. 97-
219) established SBIR programs within the major federal research and
development (R&D) agencies. The intent of the effort was to increase
government funding of small, high technology companies for the
performance of R&D with commercial potential. Federal departments with
an R&D budget of $100 million or more are required to set aside part of
this amount to finance the SBIR activity. From its inception in FY 1983
through FY 2002, over $13.5 billion in awards have been made for more
than 70,000 projects. The original program was extended several times
and is currently scheduled to sunset on September 30, 2008.
Program Description
The Small Business Innovation Research program is designed to
increase the participation of small, high technology firms in the
federal R&D endeavor. Congressional support for the initiative was
predicated upon the belief that while technology-based companies under
500 employees tended to be highly innovative, and innovation is
essential to the economic well-being of the United States, these
businesses were under represented in federal R&D activities. Agency
SBIR programs guarantee this sector a portion of the government's
research and development budget to compensate for what was viewed as a
preference for financing large corporations.
Current law requires that every federal department with an R&D
budget of $100 million or more establish and operate an SBIR program. A
set percentage of that agency's extramural research and development
budget--originally at 1.25 percent, now at 2.5 percent--is to be used
to support mission-related work in small companies. (It should be noted
that P.L. 97-219 excluded appropriated funds for defense programs in
the Department of Energy from that agency's extramural R&D
calculations.) In addition, all departments with R&D spending above $20
million are directed to establish goals for financing small business
R&D at levels higher than the previous year.
The objectives of the SBIR program include stimulation of
technological innovation in the small business sector, increased use of
this community to meet the R&D needs of the government, additional
involvement of minority and disadvantaged individuals in the process,
and expanded commercialization of the results of federally-funded R&D.
To achieve this, agency SBIR efforts involve a three-phase activity. In
the first phase, awards up to $100,000 (for 6 months) are provided to
evaluate a concept's scientific or technical merit and feasibility. The
project must be of interest to and coincide with the mission of the
supporting organization. Projects that demonstrate potential after the
initial endeavor can compete for Phase II awards of up to $750,000
(lasting one-two years) to perform the principal R&D. Phase III
funding, directed at the commercialization of the product or process,
is expected to be generated in the private sector. Federal dollars may
be used if the government perceives that the final technology or
technique will meet public needs. P.L. 102-564, a subsequent 1992
reauthorization of the program, directed agencies to weigh commercial
potential as an additional factor in evaluating SBIR proposals. This is
to encourage funding of projects that may have market applicability
rather than those that meet only the needs of government.
Ten departments have SBIR programs including the Departments of
Agriculture, Commerce, Defense (DOD), Education, Energy,
Transportation, and Health and Human Services; the Environmental
Protection Agency; the National Aeronautics and Space Administration
(NASA); and the National Science Foundation (NSF). The Departments of
Homeland Security and Housing and Urban Development are expected to
begin participating in FY 2004. Each agency's SBIR activity reflects
that organization's management style. Individual departments select R&D
interests, administer program operations, and control financial
support. Funding can be disbursed in the form of contracts, grants, or
cooperative agreements. Separate agency solicitations are issued at
established times.
The Small Business Administration (SBA) established broad policy
and guidelines under which individual departments operate SBIR
programs. The agency monitors and reports to Congress on the conduct of
the separate departmental activities. Criteria for eligibility in the
SBIR program include companies that are independently owned and
operated; not dominant in the field of research proposed; for profit;
the employer of 500 or less people; the primary employer of the
principal investigator; and at least 51 percent owned by U.S. citizens
or lawfully admitted permanent resident aliens. The SBA operates a
computer system to link SBIR awardees with venture capital firms. P.L.
106-554 mandated the establishment of two data bases, one for
government and one for the public, that provide information on SBIR
programs across departments.
A pilot effort designed to encourage commercialization of
university and federal laboratory R&D by small companies was created by
P.L. 102-564, reauthorized through FY 2001 by P.L. 105-135, and
extended through FY 2009 by P.L. 107-50. The STTR program provides
funding for research proposals that are developed and executed
cooperatively between a small firm and a scientist in a research
organization and fall under the mission requirements of the federal
funding agency. Up to $100,000 in Phase I financing is available for
one year; Phase II awards of $500,000 may be made for two years.
Financial support for this effort comes from a 0.15 percent set-aside
of the R&D budgets of departments that spend over $1 billion per year
on research and development. According to the provisions of P.L. 107-
50, in FY 2004 the set-aside will increase to 0.3 percent and the
amount of individual Phase II awards will increase to $750,000. The
Departments of Energy, Defense, and Health and Human Services, NASA,
and NSF participate in the STTR program.
Implementation
The General Accounting Office (GAO) is legislatively directed to
assess the implementation of the Small Business Innovation Development
Act, as amended, and has issued a series of reports documenting its
findings. A 1987 study found that both the evaluation and selection
processes were sufficient to ``reasonably'' insure awards were based on
technical merit. It was also determined that the majority of agencies
were not awarding Phase I grants and contracts within the six-month
time frame required by the SBA guidelines. Another GAO report the
following month surveyed the participants and noted that most were
``generally satisfied'' with the administration of SBIR programs.
In 1989, GAO reported that agency heads found the SBIR effort to be
beneficial and met the organization's R&D needs. Most indicated that
the ``. . .SBIR programs had developed new research areas, placed more
emphasis on the application of research results, and led to wider use
of small businesses as research performers.'' The study concluded that
projects were, for the most part, of high quality. At DOD and NASA,
however, SBIR efforts stressed R&D to meet agency mission requirements
in contrast to other SBIR programs that focused on commercialization
for private sector markets. All of the departments stated that SBIR
projects, when compared with other research activities, had greater
potential to result in new products and processes.
Testimony presented by GAO in 1991 stated that the program ``. .
.clearly is doing what Congress asked it to do in achieving commercial
sales and developmental funding from the private sector.'' An SBA study
found that approximately one in four SBIR projects will result in the
sale of new commercial products or processes. Another GAO report issued
in May 1992 noted that despite a short time frame and the fact that
many SBIR projects had not had sufficient time to mature into
marketable technologies and techniques, ``. . .the program is showing
success in Phase III activity.'' As of July 1991, almost two-thirds of
the projects already had sales or received additional funding
(primarily from the private sector) totaling approximately $1.1
billion.
The 1992 study also identified several issues for possible further
congressional exploration. According to GAO, DOD placed less emphasis
on commercialization than other agencies and utilized the SBIR program
primarily to address the department's R&D needs. Questions were raised
about the requirements for competitive bidding when companies looked to
federal departments for Phase III contracts after successfully
completing Phases I and II. GAO noted that clarification of the
Competition in Contracting Act of 1984 (as amended) might be necessary.
In addition, there was disagreement over whether the federal agency or
the small firm should continue to work on technology development after
the cessation of SBIR project funding. GAO also concluded that firms
receiving multiple Phase II awards tended to have lower Phase III sales
and less additional developmental support. The reasons for this
remained unclear, but the suggestion was made that these companies may
have focused on securing funds through SBIR awards rather than through
commercialization of their R&D results.
A March 1995 GAO report found that multiple Phase II funding had
become a problem, particularly at NSF, NASA, and DOD. Among the reasons
cited were the failure of companies to identify identical proposals
made elsewhere in violation of the mandatory certification procedure;
uncertainty in definitions and guidelines concerning ``similar''
research; and lack of interagency mechanisms to exchange information on
projects. Several recommendations were made to address duplication. GAO
testimony presented in March 1996 indicated that the SBA had taken
steps to implement these suggestions. The study also determined that
the quality of research appeared to have ``kept pace'' with the
program's expansion, although it was still too early to make a
definitive judgment. Factors supporting this assessment included the
substantive level of competition, more proposals deemed meritorious
than could be funded by agencies, and appraisals by departmental SBIR
personnel indicating the high quality of submissions.
Another GAO study, released in April 1998, noted that between 35-50
percent of SBIR projects had resulted in sales or additional private
sector investment. Despite earlier indications of problems associated
with multiple award winners, this report found that such firms have
similar commercialization rates as single awardees. Critical technology
lists were being used to determine agency solicitations and there was
little evidence of participation by foreign firms. While several
agencies had new programs to assure continuity in funding, there were
indications of possible inaccuracies in defining the extramural R&D
budgets upon which the set-aside is based.
The June 1999 GAO analysis reported that SBIR awards tend to be
concentrated both geographically and by firm despite widespread
participation in the program. ``The 25 most frequent winners, which
represent fewer than one percent of the companies in the program,
received about 11 percent of the program's awards from fiscal year 1983
through fiscal year 1997.'' Businesses in a small number of states,
particularly California and Massachusetts, were awarded the most number
of projects. The study also noted that while commercial potential is
considered by all agencies, each has developed different evaluation
approaches. Other goals, including innovation and responsiveness to
agency mission, still remain important in determining awards.
GAO also has evaluated the STTR program. A January 1996 report
found that, in general, federal agencies favorably rated the quality of
winning proposals (in the first year) and that most projects had
commercial potential, although the costs might be high. The government
had taken steps to avoid potential conflicts of interest between
federal laboratories and departmental headquarters. There was no
indication that this pilot effort was competing for proposals with the
established SBIR activity or ``. . .reducing the quality of the
agencies' R&D in general.'' Instead it was credited for encouraging
collaborative work. Yet, GAO noted that because the programs are so
similar, there are questions whether or not a separate activity is
necessary. Any real evaluation of success in technology transfer,
however, could not be accomplished for several years because of the
time needed to bring the results of R&D to the commercial marketplace.
These findings were reiterated in testimony given by GAO in May and
September 1997.
A June 2001 GAO study of all companies which received STTR awards
between FY 1995 and FY 1997 noted the participant's belief that both
the firms and the research institutions contributed to expanded R&D
although the private sector was more influential in determining the
direction of the research. The companies ``. . .reported about $132
million in total sales and about $53 million in additional
developmental funding.'' They identified 41 new patents and the
creation of 12 new spin-off firms. Further, the awardees preferred that
the STTR program remain separate from the SBIR activity.
Awards
From its inception in FY 1983 through FY 2001, over 64,248 awards
have been made totaling more than $12 billion. The table below
summarizes the funding and the number of projects selected for the SBIR
program as provided by the SBA; information on the STTR program is
contained in the subsequent chart.
Chairman Smith. I am going to do some preliminary, and
maybe even I will make some of my comments to you folks.
I am Nick Smith, a Member of Congress from Michigan, who
has been on the Science Committee for 12 years, and it just
seems to me that since government is in a particular sort of a
crunch situation right now, because we are spending a lot of
money on homeland security. So, that means that the oversight
of every program, including the two programs we are going to
discuss today, we are going to look very carefully at, are ways
to be more efficient, to be more productive, how can we help
small business more, and at the same time try to make sure
taxpayers get their bang for the buck.
I see the organizer of this meeting, and we're not on
record yet, Eddie Bernice, but we will be when you take your
seat.
Mr. Barrish. All right, thank you, Congressman Smith. My
name is Jim Barrish, I'm the Director of Technology Assessments
Program.
Chairman Smith. Jim, sorry, I didn't know you were going to
do that.
Mr. Barrish. No problem. I'd like to say a few words first,
and welcome you all here to the Bill J. Priest Institute. One
of the processes of this hearing today, what we'd like to do
is, many of you will have questions and we are going to try to
if you could jot those down on a piece of paper and pass them
forward they will be picked up by Ms. Harrington here, she just
raised her hand. She's going to be passing out some little note
pads, so we'd appreciate if you could do that, and that will
help us to keep an orderly manner of the question and answer
process.
Congresswoman Johnson and Congressman Smith are just about
ready to go, but first off I'd like to have the President of
Bill J. Priest Institute welcome you here and say a few words.
The President is Dr. Glen Downs.
Dr. Downs. Good morning. I'm going to just say just a
welcome, and I know the Congressmen and Congresswoman have much
to do and much to accomplish this morning. We want to first of
all welcome you and our very good friend, Congresswoman
Johnson, who has supported us so well, and we are delighted to
have a Michigan man with us today as well. So, thank you.
But, welcome to the Bill J. Priest Institute, and we're
delighted to have you here, and we are always pleased with what
the STTR efforts are doing, and we are looking forward to our
conference coming up in May on the STTR conference on May the
11th. So, I wanted to make sure you put that down.
But, welcome this morning, and just from a logistics
standpoint, restrooms, if you need those, are down the hall to
the right, so make yourselves at home, and if we can help you
in any way here this morning be sure to call us.
Thank you very much.
Mr. Barrish. Okay.
Chairman Smith, we'll turn it over to you and Eddie
Bernice.
Chairman Smith. Well again, thank you all for coming this
morning, and any ideas or suggestions that you have that you
don't get a chance to somehow convey this morning, please feel
free to contact Congresswoman Johnson or myself. I mean, what
we are trying to do is make sure the program is running as
effectively and efficiently as it can, both the SBIR and the
STTR program.
We want to make sure that we are maximizing and developing
the kind of research that's going to be most helpful, both to
government and to the private sector.
It seems to me that research is one of our keys in
developing the kind of products that people around the world
are going to want to buy, developing the kind of products that
we in government can make, that we can use and be more
efficient in what we are trying to produce as a government, and
developing the kind of research that's going to allow us to
find more efficient ways to develop those products.
So, the future of our economy that's under very strong
competition right now from other countries around the world is
the challenge that our kids and our grandkids are going to have
in the future.
I'd like to especially thank Eddie Bernice Johnson for
arranging this hearing today, this Science Committee hearing.
This Science Committee has four full committees. This is
the Research Subcommittee of Science. We take a lot of pride, I
think, in our good relations in the Science Committee between
Democrats and Republicans. The Representative and I,
particularly, I think, work together too, and we've
accomplished some good bills for the National Science
Foundation, probably one of our largest responsibilities.
Federal agencies, of course, with research dollars of over
$100 million are obligated to be part of the SBIR program, and
if an agency has over a billion dollars then they are required
to spend part of that money in the STTR program.
The SBIR and the STTR programs, the goal is to promote
economic growth and to allow government to act more effectively
and more efficiently for the products that they buy.
The initial funding is distributed competitively. SBIR and
STTR programs help eliminate some of the financial barriers to
research and development efforts of small businesses that are
so important for increasing revenue and ultimately creating
jobs. So, in addition to how it can help small business and
economic development in this area of the country, we are going
to take back your suggestions and ideas of how it can help in
the United States, and also how can we do it more effectively.
Is there a chance that we might take some of the eventual
profits from a company that has been stimulated by taxpayer
dollars going into being part of the research effort to come
back as a revolving fund or to come back possibly with what Dr.
Slocum has suggested in terms of being a mentor for other
companies and giving some of that some of your time and
encouraging other companies how to get involved in this
government program.
We'll be looking at how the money that you get is received
as a small business, does that go on your tax returns as
income? Is it also eligible for the research development tax
credit, and so we are interested and probably, or at least I've
got some questions, Eddie Bernice, on the whole ramifications
and how do we do a better job.
With that, let me again appreciate the chance to be here
and thank Eddie Bernice again for arranging and organizing this
hearing, and so with that, Congresswoman, I would turn the
microphone over to you.
Ms. Johnson. Thank you very much, Mr. Chairman, and thank
you for coming to this sunny day in Texas. I know it's not like
this in Michigan right now, and you won't be here long, but do
enjoy.
Chairman Smith. Well, and just to interrupt, I do, I've got
a meeting in Pittsburgh and my plane leaves at 12:40, so I'll
try not to talk long and I'll turn it over to you.
Ms. Johnson. Okay, thank you very much, and let me thank
the Dallas County Community College District for hosting us,
and all of the panelists who have come, and all of you who are
availing yourselves for this information.
Can you hear me? Now, can you hear me? Is that better?
Okay, now am I sounding a little bit more clear.
Again, let me thank the Dallas County Community College
District for hosting us today, and I want to thank my chair,
Mr. Smith, for traveling here from Michigan. We all stay so
busy and I knew that he would be, as we all are. And, I thank
the panelists for being here, and you.
I think it really is an important hearing to increase the
awareness of the Small Business Innovation Research, the SBIR
program as we call it, and the Small Business Technology
Transfer, which we call the STTR program, and to learn about
the opportunities that these programs offer to small
businesses, especially those owned by minorities and women.
We want to thank Mr. Jim Barrish, who has worked very hard
in putting all the logistics together. He's accustomed to me
coming down and borrowing these facilities. And finally, I'm
going to cut my prepared remarks short and simply submit them
to the record so that we can go ahead and get started.
I want to apologize for being a little bit late. I started
out going to be here early, but an accident on the freeway
slowed me down a bit, and there's only way out from where I
live.
This is a funding vehicle which is vastly under tapped by
small businesses in this metroplex, and by research
universities. So, when the State of Texas is viewed as a whole,
it does not do badly under the SBIR program, but when we look
at this area we find that we are not taking advantage of it.
Texas received a total of 540 grants worth of $106 million
out of $1.4 billion awarded nationwide in 2002. So, when one
looks regionally within the state it's a different story, less
than 20 north Texas companies have taken advantage of this.
So, I believe that for our region this is a particularly
important funding source, and there are 700 hardware suppliers
for the Department of Defense, and many of them are hardly
Raytheon-like companies, far less than a billion dollars in
revenue, and far less than 400 employees. So, I know that we
have plenty of companies who can take advantage of this.
Without further comment, I'm going to turn this back over
to Mr. Smith so we can proceed with our witnesses.
Chairman Smith. Would you like to introduce the witnesses?
Ms. Johnson. Okay.
We have Mr. Joseph Montes, who is a Region Administrator,
and Mr. Lavan Alexander, who is the District Director of the
Dallas-Fort Worth Small Business Administration, and I'm
delighted that they were able to come, especially Mr. Alexander
who got a very late invitation. Ms. Jo Anne Goodnight, who is
the Program Coordinator for the National Institutes of Health
for the SBIR and the STTR Programs. Dr. Feng, who is Vice
President for Research at the University of Texas at Dallas,
and I tell you he is very active. We are in touch very often. I
am delighted you are here. Dr. Robert Slocum, who is Chair and
Chief Technical Officer of the Polatomic, which I'm assuming is
one of the businesses, and Dr. Oliver Murphy, who is President
of Lynntech, Incorporated.
Chairman Smith. These are people that are coming in, that
are teleconferencing in from the Small Business Administration.
In fact, I'll grab your mike, Eddie Bernice.
Ms. Johnson. Okay, I was wondering who was
teleconferencing.
Chairman Smith. The teleconferencing, besides the Science
Committee in Washington, teleconferencing in from the Small
Business Administration, Victor Klingelhofer, Maurice Swinton,
and Brad Berry, all from the Small Business Administration.
And, with that, we will proceed, and without objection the
full text of every witness' testimony will be included in the
record. This record is made available to all Members of the
Science Committee, so even though there are only two of us here
today this information will be available, not only to all the
Members of our subcommittee, but all the Members of the Science
Committee, and I would ask that the witnesses try to limit
their presentation to five to seven minutes, so that maybe we
can get on and have a little more time for questions, and with
that, Dr. Murphy, we'll start with you, unless David Finger, my
Science Committee staff, told me that we are going to start
with Mr. Alexander.
Mr. Alexander. What we are going to do is start with the
Regional Administrator, who will just do one statement to cover
both. The other we'll put on record.
Chairman Smith. So, Mr. Montes.
STATEMENT OF JOSEPH MONTES, ADMINISTRATOR OF REGION VI FOR THE
SMALL BUSINESS ADMINISTRATION in DALLAS, TEXAS; ACCOMPANIED BY
LAVAN ALEXANDER, DISTRICT DIRECTOR, DALLAS-FORTH WORTH, SMALL
BUSINESS ADMINISTRATION
Mr. Montes. Thank you, Mr. Chairman, Congresswoman Johnson,
for inviting the U.S. Small Business Administration (SBA) to
testify at your hearing this morning.
The Small Business Innovation Research (SBIR) program, as
you know, is a highly-competitive program that encourages small
business to explore their technological potential and provides
the incentive to profit from its commercialization.
Small businesses need only to certify that they meet the
program's eligibility criteria to participate in the SBIR and
Small Business Technology Transfer (STTR) programs.
In 1992, the Congress enacted Public Law 102-64, which
authorized the STTR program, a companion program to SBIR. In
2002, Public Law 107-50 reauthorized the STTR program through
Fiscal Year 2009.
Even though the SBIR program was a success, Congress felt
that more could be done to link small businesses with creative
ideas and technology at the universities' non-profit scientific
and educational institutions and federal laboratories. This
collaboration will result in a better commercialization rate
for federally-sponsored research conducted at non-profit
institutions.
Both programs share the same philosophy, to use federally-
funded research and development requirements to promote
technological innovation by small businesses and strengthen the
American economy.
Small businesses that have been successful in the SBIR and
STTR programs have been those that have submitted proposals
demonstrating both a high level of technical merit and the
ability to use available resources such as subcontractors and
laboratories to assist in developing and delivering the
required research.
Following submissions or proposals, agencies make SBIR and
STTR awards based on small business qualification, degree of
innovation, technical merit and future market potential. Small
businesses that receive awards then begin, as you know, a
three-phase program. Phase I for the SBIR program is
essentially the start-up phase. Awards of up to $100,000 for
approximately six months duration support exploration of the
technical merit or feasibility of an idea or technology. Phase
II then awards of up to $750,000 for up to two years, which
expand Phase I results. The Phase II award decision process
requires, among other things, substantive consideration of a
proposal's commercial potential. Phase III is, essentially, the
commercialization process. At that phase, no SBIR funds support
the program.
Like SBIR, the STTR program is structured in three phases.
STTR goes beyond the SBIR program, in that it involves
cooperative research and development performed jointly by a
small business and a research institution.
Although the project is a joint effort, the small business
exercises overall management, control and responsibility for
the project.
I should note that in this past year, as part of the
overall government program review process initiated by the
Office of Management and Budget, the SBIR/STTR programs of the
Departments of Defense and Commerce were reviewed with the
Program Assessment Rating Tool. Those reviews and corresponding
recommendations will be published in conjunction with the
release of the President's Fiscal Year `05 budget.
Some of the successful companies here in Texas who have
participated in the SBIR and STTR programs are: Knowledge Based
Systems of College Station, Texas, which commercialized a
knowledge based software tool that facilitates optimization
model development; Polatomic, Incorporated, of Richardson,
developed a magnetometer developed under an SBIR award to fill
the U.S. Navy's need for a high-performance sensor for
detection and localization of magnetic targets of interest for
anti-submarine warfare; and OmniSite Bio Diagnostics of Austin,
which has developed technologies extended into human
diagnostics, therapeutics, home care and pharmaceutical
sectors, in addition to homeland defense, biological warfare,
veterinary, agricultural and environmental markets.
In Fiscal Year `02, the most recent year for which data is
available, the State of Texas ranked ninth among all states,
the District of Columbia, and Puerto Rico, in terms of total
dollars received from SBIR program funding. That year, 220 SBIR
awards were made to small, high-tech businesses in the State of
Texas totaling $53 million, 11 awards totaling $2,752,000 were
made to businesses that certified that they were minority
owned, 23 awards totaling $4 million were made to businesses
that certified that they were woman owned. The 220 SBIR awards
made to firms in Texas represent awards to 89 unique
businesses.
In Fiscal Year `02, the State of Texas ranked fifth among
all the states, the District of Columbia, and Puerto Rico, in
terms of total dollars received from STTR program funding. That
year, 21 STTR awards were made to small, high-tech businesses
in the State of Texas, totaling $4.3 million, three awards
totaling $700,000 were to businesses that certified that they
were minority-owned, one award, totaling $483,000, was made to
a firm that certified that it was woman owned. The 21 total
STTR awards made to firms in Texas represent awards to 20
unique businesses.
This concludes my presentation. Thank you very much, Mr.
Chairman.
[The prepared statement of Mr. Montes follows:]
Prepared Statement of Joseph Montes
for Victor G. Klingelhofer
Associate Deputy Administrator
Office of Government Contracting and Business Development
U.S. Small Business Administration
Thank you for inviting me to discuss the Small Business Innovation
Program and the Small Business Technology Transfer Program.
The Small Business Innovation Development Act of 1982, Public Law
97-219 (as amended) directs the U.S. Small Business Administration
(SBA) to establish policy for monitoring, evaluating, and reporting on
accomplishments of the Small Business Innovation Research (SBIR)
program. Public Law 106-554 reauthorized the program through September
30, 2008.
The SBIR program is a highly competitive program that encourages
small business to explore their technological potential and provides
the incentive to profit from its commercialization. Small businesses
need only certify that they meet the following eligibility criteria to
participate in the SBIR and Small Business Technology (STTR) programs:
(a) The concern must be organized for profit, although it can
take the form of a sole proprietorship, partnership, limited
liability company, corporation, association, trust, cooperative
or joint venture;
(b) The concern must be 51 percent owned and controlled by one
or more U.S. citizens or permanent resident aliens and must
have a significant place of business in and operate primarily
within the U.S.;
(c) Principal researcher must be employed more than 50 percent
by the small business; and
(d) The concern's size limit must be 500 employees or fewer.
In 1992, the Congress enacted Public Law 102-564, which authorized
the STTR program, a companion program to SBIR. In 2002, Public Law 107-
50 reauthorized the STTR program through FY 2009. Even though the SBIR
program was a success, Congress felt that more could be done to link
small businesses with creative ideas and technology at universities,
non-profit scientific and educational institutions, and federal
laboratories. This collaboration would result in a better
commercialization rate for federally sponsored research conducted at
non-profit institutions. Both programs share the same philosophy to use
federally-funded research and development requirements to promote
technological innovation by small businesses and strengthen the
American economy.
Small businesses that have been successful in the SBIR and STTR
programs have been those that have submitted proposals demonstrating
both a high level of technical merit and the ability to use available
resources such as subcontractors and laboratories to assist in
developing and delivering the required research. Many of the
unsuccessful proposals submitted to the programs have lacked technical
merit, did not address the research effort fully, attempted to perform
the research effort on their own without having the necessary internal
resources to accomplish this effort, and/or dud not include all of the
necessary forms, certifications and or other documents required by the
requesting procuring agency. I am certain that testimony of my
colleagues at the National Institutes of Health and the National
Science Foundation can provide additional information on this issue
from their experience.
Following submission of proposals, agencies make SBIR and STTR
awards based on small business qualification, degree of innovation,
technical merit, and future market potential. Small businesses that
receive awards then begin a three-phase program.
Phase I for the SBIR program is essentially the start-up phase,
involving a solicitation of contract proposals or grant applications to
conduct feasibility-related experimental or theoretical R/R&D related
to describe agency requirements. Awards up to $100,000 for
approximately six-months duration support exploration of the technical
merit or feasibility of an idea or technology.
Phase II awards of up to $750,000, for up to two years, expand
Phase I results. The Phase II award decision process requires, among
other things, substantive consideration of a proposal's commercial
potential.
Phase III refers to work that derives (from, extends, or logically
concludes effort(s) performed under prior SBIR funding agreements. This
comprises the period during which Phase II innovation moves from the
laboratory into the marketplace. No SBIR funds support this phase.
Like SBIR, the STTR program is structured in three phases. Phase I
in the STTR program is funded at up to $100,000 for a one-year period.
Phase II funds Phase I projects that have the most potential for
further development at up to $750,000 for up to an additional two
years. Under Phase III, no federal STTR funding is provided to bring
the innovation to the commercial marketplace.
STTR goes beyond the SBIR program in that it involves cooperative
research and development performed jointly by a small business and a
research institution. Although the project is a joint effort, the small
business exercises overall management, control, and responsibility for
the project.
Since inception of the program, over 12,000 awards have been made
totaling $549 million. Minority/disadvantaged firms have received 312
awards totaling $63.5 million.
SBA's role in the SBIR and STTR programs is to:
Develop, coordinate, issue and update the policy
directive.
Develop and administer information and outreach
programs for the SBIR and STTR programs.
Develop and maintain a source and information file of
interested small businesses.
Survey, monitor and report on each agency's SBIR and
STTR programs.
Report annually to Congress on each agency's SBIR and
STTR program.
The SBIR and STTR programs continue to demonstrate that, with
program support from the Federal Government, small high-tech firms can
convert basic ideas and research into commercial products. This
partnership between the Government and private sector has proved to be
remarkably effective in some areas.
Over a 20-year period, federal agencies participating in the SBIR
program have awarded more than 69,000 awards worth over $13.3 billion
to thousands of small high-tech companies. Minority/disadvantaged firms
have received over 8,000 awards totaling $2.9 billion. Awards have been
made to firms in all 50 states, Puerto Rico and the District of
Columbia.
I should note that in this past year, as part of the overall
government program review process initiated by the Office of Management
and Budget, the SBIR/STTR programs of the Departments of Defense and
Commerce were reviewed with the Program Assessment Rating Tool (PART).
Those reviews and corresponding recommendations will be published in
conjunction with the release of the FY 2005 President's Budget.
The SBA, through its Federal and State Technology Partnership
(FAST) program, requires that applicants to the program address in
their proposal submissions for funding how they will provide outreach
and technical assistance to minority and women-owned firms within their
respective states. This criterion is weighted and evaluated by a peer
review panel that selects the grantees for the FAST program. The SBA
also has been the lead agency for the past five years in an initiative
to provide outreach and technical assistance to the Historically Black
Colleges and Universities (HBCUs), Small Disadvantaged, Minority and
Women-owned businesses. Through a partnership between the Environmental
Protection Agency (EPA), Defense Advanced Projects Agency (DARPA) and
the SBA, representatives at various HBCUs were engaged by the co-
sponsoring federal program managers to train them in the program
administration and technical components of the SBIR and STTR programs.
This has enabled the HBCUs to become mentors within their given states
or regions and assist in increasing the participation level of the
under-represented groups. This initiative has proven to be very
successful. Both the EPA and DARPA have acknowledged increases in their
programs by small disadvantaged, minority and women-owned businesses.
Other participating federal agencies have also witnessed an increase in
the number of proposals received for their agencies SBIR and STTR
programs.
Some of the successful companies in Texas who have participated in
the SBIR and/or the STTR programs are:
(1) Knowledge Based Systems, Inc, College Station, Texas,
commercialized a knowledge based software tool that facilitates
optimization model development;
(2) Polatomic, Inc., Richardson, Texas, developed a
magnetometer developed under an SBIR award to fill the U.S.
Navy's need for a high performance sensor for detection and
localization of magnetic targets of interest for Anti-Submarine
Warfare; and
(3) OmniSite BioDiagostics, Inc, based in Austin, Texas, has
developed technologies extending into human diagnostic,
therapeutic, home care, and pharmaceutical sectors, in addition
to homeland defense, bio-warfare, veterinary, agricultural, and
environmental markets.
Additional stories on the awards that have impacted businesses in
Texas and elsewhere can be found in the SBA's SBIR and STTR Annual
Reports to Congress, and also on the SBA's SBIR website at www.sba.gov/
sbir listed under the information for the Federal and State Technology
Partnership Program (FAST). The SBA will also forward copies of the
most recent SBIR and STTR Annual Reports to the Members of this
hearing.
In Fiscal Year 2002, the most recent year for which data is
available, the state of Texas ranks ninth among all states, the
District of Columbia, and Puerto Rico in terms of total dollars
received from SBIR program funding. That year, 220 SBIR awards were
made to small, high-technology businesses in the State of Texas
totaling $53,422,476. Eleven awards totaling $2,752,756 were made to
businesses that certified that they were minority-owned. Twenty-three
awards totaling $4,250,893 were made to businesses that certified that
they were woman-owned. The 220 total SBIR awards made to firms in Texas
represent awards to 89 unique businesses.
In Fiscal Year 2002, the state of Texas ranks fifth among all
states, the District of Columbia, and Puerto Rico in terms of total
dollars received from STTR program funding. That year, 21 STTR awards
were made to small, high-technology businesses in the State of Texas
totaling $4,353,693. Three awards totaling $699,333 were made to
businesses that certified that they were minority-owned. One award
totaling $483,781 was made to a firm that certified that it was woman-
owned. The 21 total STTR awards made to firms in Texas represent awards
to 20 unique businesses.
Thank you for the opportunity to provide you this written
testimony.
Chairman Smith. Thank you.
Ms. Goodnight.
STATEMENT OF MS. JO ANNE GOODNIGHT, PROGRAM COORDINATOR, OFFICE
OF EXTRAMURAL RESEARCH, NATIONAL INSTITUTES OF HEALTH, U.S.
DEPARTMENT OF HEALTH AND HUMAN SERVICES, BETHESDA, MARYLAND
Ms. Goodnight. Good morning, Mr. Chairman, Congresswoman
Johnson, and Members of the Committee receiving the written
record.
My name is Jo Anne Goodnight. I am the Coordinator of the
Small Business Innovation Research and Small Business
Technology Transfer programs at the NIH, National Institutes of
Health, and also for the Public Health Agencies in the
Department of Health and Human Services. On behalf of the NIH,
I am pleased to have the opportunity to provide an overview of
the NIH SBIR and STTR programs.
My long statement focuses primarily on the role that SBIR
and STTR plays in the NIH research agenda, ways small
businesses can take advantage of the research funding
opportunities these programs offer, and I'll end with a few of
our success stories.
The NIH constitutes about 98 percent of the Department's
entire SBIR and STTR program activity. In addition, of the 11
participating federal agencies our department contributes the
second largest amount of SBIR and STTR funding.
In Fiscal year 2003, the NIH SBIR and STTR budget was about
$557 million. However, NIH tends to invest more than the
minimum statutory requirement, resulting in actual obligations
of $564 million. NIH made about 2,000 SBIR awards, amounting to
$533 million, and 152 STTR awards, amounting to $31 million.
The State of Texas received from NIH a total of 81 SBIR
awards, for a total of $19.1 million, and seven STTR awards
amounting to $2 million in Fiscal Year 2003. Of these, Dallas
received six SBIR grant awards and one STTR award, totaling
about $1.4 million.
The NIH mission is to uncover new dollars that will lead to
better health for everyone. The SBIR and STTR programs help us
accomplish the mission, particularly in the goal of translating
scientific findings and advances from the test tube to the
medicine cabinet.
Through a competitive three-phase award system, the
programs provide qualified small business concerns with
opportunities to propose innovative ideas, to explore their
technological potential, and to profit from commercialization
of federally-funded R&D projects that are relevant to our
mission. We've watched the programs evolve through stages of
infancy when a Phase I award was but $50,000 for six months,
through some trials and tribulations of adolescence, into a
mature, yet now invigorated program.
NIH has 23 institutes and centers that participate in the
SBIR and STTR programs, and each of these awarding components
has a research mission with well-defined priorities. Examples
of the types of research we support include, but certainly are
not limited to, biodefense, biosensors, nanotechnologies,
proteomics, imaging, bioengineering, behavioral research,
computational biology and telemedicine technology.
While we issue solicitations for projects on specific
topics relevant to each Institute and Center, we also encourage
small businesses to propose investigator-initiated research
ideas relevant to our mission. Investigator-initiated ideas are
the cornerstone of the NIH research portfolio, including
projects supported by the SBIR and STTR programs.
Now, for a company to obtain an SBIR or STTR award, it must
take several steps. Start with an innovative idea with
commercial potential. Understand our agency's mission and areas
of research we support. Discuss the idea with our relevant
program staff. Submit the application for a scientific and
technical merit review. Discuss with program staff the outcome
of the review and obtain guidance for the next steps. Meet the
eligibility criteria for a small business concern as defined by
the Small Business Administration and demonstrate research
integrity.
While there are 11 federal agencies that participate in a
national SBIR program, it's not a one-size-fits-all program,
given our varying missions and needs. Procedures that
distinguish the NIH SBIR and STTR programs from those at other
agencies are primarily a result of the degree of flexibility
that the SBA has provided to accommodate the changing nature of
biomedical and behavioral research.
What has made our program so appealing are the
opportunities for firms to propose R&D in the fields that have
the most biological promise, rather than to restrict their
ideas to projects that can only be conducted under a prescribed
amount of time and money. Other distinguishing features of the
NIH SBIR and STTR programs include multiple submission dates,
allowability of amended application, and gap funding options.
NIH has taken steps to enhance and streamline of programs,
particularly, with regard to bridging the gaps between the
phases and enhancing our outreach endeavors. Within the State
of Texas, NIH was pleased to be a major participant at
yesterday's Southwest SBIR and STTR Forum, hosted by UH SBDC,
Bio Houston, Rice University and Houston Technology Center.
Last June, NIH participated in an SBIR and STTR ATP
Workshop in Dallas, hosted by the Dallas Forum of Biomedical
Technology and the North Texas SBDC, an event that was attended
by about 140 participants, and we're looking forward to
participating in similar events this May.
A number of NIH SBIR and STTR projects have resulted in
significant improvements to our nation's health and an
increased productivity of other researchers. I would like to
describe just a few successes in particular that exemplify the
kind of SBIR and STTR research that NIH supports.
Looking back now more than 20 years to one of the earliest
SBIR projects that NIH supported, funding allowed OPTIVA
Corporation in the State of Washington to develop a nine-volt
powered toothbrush, the Dentifreeze Dispensing Sonic Brush,
which we have all come to know as the Sonicare Toothbrush. In
addition to the health benefits, this project resulted in a
$300 million business and the creation of over 500 jobs. OPTIVA
was sold to Philips Electronics in 2000.
Plexon, Inc., in Dallas, Texas, received an NIH Phase I and
Phase II award to develop an automated procedure for detecting
and separating extracellular neural action potentials, or
spikes, in real time. A diagram is included in my written
statement for the record to portray this technology, which has
applications to aid physically-impaired individuals. In
addition to providing insight into the basic brain function,
this technology has broad implications in the development of
interfaces for direct brain-machine communication and
prosthetic devices for nervous system impaired individuals.
Plexon has grown from a small, one-person company, to a 20-
employee company of a highly-focused team of engineers,
biophysicists and neuroscientists, with R&D and technical
expertise. Joint R&D activities are being conducted with the
University of North Texas, as well as other research
institutions. Plexon's sales have reached the $3 million per
year mark, and their customers include over 75 domestic and
international academic research labs, research hospitals,
pharmaceutical companies and military research labs.
There are two additional success stories that are in my
written statement, from Nano Matrix, Incorporated, in Dallas,
Texas, as well as MicroFab Technologies, Incorporated, in
Plano, Texas.
Thank you for the opportunity to describe how NIH has
utilized the programs and benefitted from them, and I'd be
pleased to answer any questions you may have.
[The prepared statement of Ms. Goodnight follows:]
Prepared Statement of Jo Anne Goodnight
Good morning Mr. Chairman, Congresswoman Johnson, and Members of
the Committee. My name is Jo Anne Goodnight. I am the Coordinator of
the Small Business Innovation Research (SBIR) and Small Business
Technology Transfer (STTR) Programs at the National Institutes of
Health (NIH) and for the Public Health agencies in the Department of
Health and Human Services. On behalf of the NIH, I am pleased to have
the opportunity to provide an overview of the NIH SBIR and STTR
Programs. My statement focuses on eight areas:
the role SBIR and STTR plays in the NIH research
agenda,
the types of research NIH supports under SBIR and
STTR,
steps a company needs to take to obtain an SBIR or
STTR award,
features that distinguish the NIH SBIR and STTR
programs from those at other agencies,
common strengths and weaknesses in NIH SBIR and STTR
application,
the effectiveness of these Programs,
efforts to enhance the Programs, and, finally,
a few of our NIH SBIR and STTR ``success'' stories.
The NIH is the principal operating component within the Department
of Health and Human Services participating in the SBIR and STTR
program. We constitute about 98 percent of the Department's entire SBIR
program activity. In addition, of the 11 participating federal
agencies, our Department contributes the second largest amount of SBIR
and STTR funding. In fiscal year (FY) 2003, the NIH SBIR/STTR budget
was about $557 million. However, NIH chose to invest more than the
minimum statutory requirement, resulting in actual obligations of $564
million. NIH made about 2000 SBIR awards (grants and contracts)
amounting to $533 million and 152 STTR awards amounting to $31 million.
The State of Texas received a total of 81 SBIR awards (amounting to
$19.1 million) and seven STTR awards (amounting to $2.0 million) in FY
2003. Of these, Dallas received six SBIR grant awards and one STTR
award, totaling nearly $1.4 million. In FY 2003, about 24 percent of
all Phase I SBIR applicants and 44 percent of all Phase II SBIR
applicants were funded; 27 percent of Phase I STTR and 43 percent of
Phase II STTR applicants received awards.
Role SBIR and STTR Plays in the NIH Research Agenda
The NIH mission is to uncover new knowledge that will lead to
better health for everyone. In the course of that mission, NIH uncovers
new knowledge about the prevention, detection, diagnosis, and treatment
of disease and disability through the support and conduct of biomedical
and behavioral research. The SBIR Program, first authorized in 1982,
and the STTR Program, authorized in 1992, play a role in the NIH
scientific research and development (R&D) arena. Through a competitive,
three-phase award system, the Program provides qualified small business
concerns with opportunities to propose and develop innovative ideas.
The Program encourages small businesses to explore their technological
potential and provides the incentive to profit from commercialization
of federally-funded R&D projects.
The SBIR and STTR programs, now more than 20 years old, have become
fully integrated into the overall scientific programs and goals of the
NIH. The SBIR and STTR programs help accomplish the NIH mission to
improve human health--particularly in the goal of translating
scientific findings and advances from the ``test tube to the medicine
cabinet'' as well as through the development of innovative products or
services that speed the process of discovery, reduce the cost of
medical care, and improve research tools.
We have watched the program evolve through stages of infancy when a
Phase I award was $50,000 for six months, through some trials and
tribulations of adolescence, and into a mature, yet invigorated
program. The NIH continues to serve the legislative intent of
stimulating technological innovation in the small business research
community as well as enhancing collaborative efforts with the academic
research community. In addition, we strive to foster and encourage the
participation of women, minority and disadvantaged persons in this
program, improve the Federal Government's dissemination of information
about the SBIR program, and increase the private sector's
commercialization of technology developed through federal R&D.
Types of Research NIH Supports Under SBIR and STTR
NIH has 23 Institutes and Centers that participate in the SBIR/STTR
Program. Each of these awarding components has a research mission with
well-defined priorities that address science and health from a specific
perspective, disease area (e.g., cancer) or area of concern (e.g.,
aging). Given 23 different awarding components, it is not difficult to
imagine the breadth and depth of science that NIH supports. Some of the
topic areas identified in our grant solicitation include, but are not
limited to, biodefense, biosensors, nanotechnologies, bioinformatics,
imaging technologies, bioengineering, behavioral research,
computational biology, telehealth technologies, and proteomics/
genomics. While we issue solicitations for projects on specific topics
relevant to each Institute and Center (IC), we also encourage small
businesses to propose investigator-initiated, mission-related and
commercially-viable research ideas. Investigator-initiated ideas are
the cornerstone of the NIH research portfolio, including projects
supported by the SBIR/STTR programs.
Seven Effective Steps to Obtain an SBIR or STTR Award
A company must take several steps to obtain an SBIR/STTR award:
1) Start with an innovative idea with commercial potential.
2) Understand our agency's mission and areas of research we
support. These are described in the grant and contract
solicitations and on the websites of the NIH ICs.
3) Contact relevant program staff to discuss the project and
identify a potential ``fit'' in an IC's programmatic area.
4) Submit an application for scientific and technical merit
review.
5) Discuss with program staff the outcome of the review and
obtain guidance for next steps.
6) Meet the eligibility criteria for a small business concern
as defined by the Small Business Administration.
7) Demonstrate research integrity.
Features That Distinguish the NIH SBIR/STTR Programs From Those at
Other Agencies
There are several features that distinguish the NIH SBIR and STTR
Programs from those at other agencies. These features are primarily a
result of the degree of flexibility that the Small Business
Administration (SBA) has provided to permit functional accommodations
to support each agency's mission outcomes.
Award amounts and project periods. What have made our Programs so
appealing are the opportunities for firms to propose R&D projects with
truly revolutionary outcomes rather than restrict their ideas to
projects that can only be conducted under a prescribed amount of time
and money. Our experience is that the conduct of certain types of
biomedical and behavioral research, such as nanotechnology, clinically-
related studies, vaccine development, and drug discovery does not
routinely lend itself to prescribed maximum time and dollar levels.
These are exceptions, but such projects can be important steps in
integrally involving small businesses in some of the most exciting,
cutting-edge research. The latitude supported by the SBA encourages
companies to propose R&D in fields that have the most biological
promise.
Submission dates and amended applications. Other distinguishing
features of the NIH SBIR/STTR Programs relate to ``closing'' or
submission dates and amended applications. NIH offers multiple
submission dates through the calendar year. In addition, an applicant,
if unfunded, may submit up to two revised applications on any of the
three submission dates. Entrepreneurs innovate constantly, so in an
effort to foster technological innovation, we provide opportunities
throughout the year, a minimum of three dates, for small businesses to
submit a new or revised Phase I (feasibility study) or a Phase II (full
R&D project) application.
Gap funding options. Another feature that distinguishes NIH form other
SBIR/STTR agencies concerns the lag time that typically occurs between
Phase I and Phase II, and between Phase II and Phase III. To address
one of the most difficult issues faced by researchers in the small
business community, namely the gap in funding between Phase I and Phase
II, we offer a Phase I/Phase II Fast-Track review option in which
applicants submit a Phase I and Phase II simultaneously for concurrent
review. We realize that the Fast-Track mechanism is not appropriate for
all applicants or for all types of research. Therefore, NIH offers
alternative avenues such as no-cost award extensions, supplemental
awards, and most recently, competing continuation awards, all of which
provide bridge funding between the phases. Examples of projects that
would benefit from uninterrupted funding include those that involve
maintenance of transgenic mice colonies or newly established cell lines
and those that include pre-clinical or clinical trials necessary to
generate data for FDA approval.
Common Strengths and Weaknesses in SBIR/STTR Applications
All NIH grant applications undergo an external peer review process
involving two sequential steps that are required by law. The first step
is performed by Scientific Review Groups, composed primarily of non-
federal scientists, physicians, and engineers (from academia and
industry) selected for their expertise and stature in particular
scientific fields. The second step is performed by the National
Advisory Council or Board of the potential awarding component to which
the grant application is assigned. Applicants receive a written summary
of the deliberations of the peer review. These analyses are very useful
in pointing out the strengths and weaknesses of the proposed research.
Some of the most common weaknesses can be categorized in the following
areas:
Lack of innovation
Inadequately defined test of feasibility
Unconvincing case for commercial potential and
societal impact
Diffuse, superficial, or unfocused research plan
Lack of sufficient experimental detail
Questionable reasoning in experimental approach
Failure to consider potential pitfalls and
alternatives
Lack of experience with essential methodologies
Unfamiliarity with relevant published work
Unrealistically large amount of work proposed
Turning those weaknesses around, common strengths include projects
that are truly innovative and have strong commercial potential and
societal import, those that include a clear feasibility test as well as
realistic and achievable milestones, and those that have a clearly
conceived experimental approach that includes sufficient experimental
detail, alternative strategies, and appropriate facilities and
expertise to conduct the proposed research.
Effectiveness of the NIH SBIR and STTR Program
We are pleased that reports issued previously by the General
Accounting Office and the Small Business Administration indicate that
the NIH SBIR program has one of the highest rates of commercialization.
Results of a recent study commissioned by our agency to evaluate the
NIH SBIR Program indicate that through the SBIR Program, small
businesses have contributed to the NIH mission of improving human
health through biomedical and behavioral research, while enhancing the
commercial potential and societal import of their technological
innovations. The National Survey to Evaluate the NIH SBIR Program
Report (PDF) and Appendices (PDF) detail the study and include program
results from companies that received Phase II awards between 1992 and
2001. Seven hundred sixty-eight SBIR awardees participated in the
study, describing their experiences with the SBIR program and their
project outcomes. Even those projects that have not realized the goal
of commercialization have generated information for the equally
important purpose of contributing to the knowledge base of science
through peer-reviewed publications. A few results of that study are
worth highlighting:
Eighty-seven percent of the awardee respondents
reported producing 670 new or improved products, processes,
usages, and/or services in support of the NIH mission.
Technological achievements also included 2,20$
technical articles, 666 patents, 2,850 conference
presentations, 453 copyrights, 252 awards, and 322 trademarks.
Fifty-two percent of awardees received 1,465
additional Phase I or Phase II awards related to continued
development and exploitation of their core technology. Of the
399 awardees who won additional SBIR awards, 40 percent also
received non-SBIR funding.
Eighty-six percent reported success in disseminating
SBIR supported technology and information among populations
using and receiving health and health care resources.
Seventy-three percent of awardee respondents reported
commercializing new or improved products, processes, usages,
and/or services in health-related fields.
Other evidences of commercialization include 48 drugs
and medical devices receiving FDA approval, 281 awardees
receiving additional funding from non-SBIR sources, and 436
having ongoing or completed marketing activities.
While commercialization is an important goal and outcome to SBIR/
STTR, it is also important not to overemphasize commercialization.
There is an element of risk associated with projects funded in the SBIR
and STTR Programs. The nature of biomedical and behavioral research is
changing and becoming more complex and multidisciplinary. Considering
that the eleven federal agencies that participate in the SBIR/STTR
programs have very different R&D needs, NIH appreciates the flexibility
that these programs offer to allow funding for bath projects that will
have near-term commercial potential and those that are far more
complex, high-risk or longer-term.
NIH Efforts to Enhance and Streamline SBIR/STTR Programs
NIH has taken steps to enhance and streamline the programs,
particularly with regard to bridging the gap between Phase II and Phase
III, tracking Program outcomes, and enhancing our outreach efforts.
Bridging the gap between Phase II and Phase III. Certain types of
biomedical and behavioral research require clinical evaluation and
federal regulatory approvals before Phase III (commercialization stage)
can ever be realized. NIH offers an opportunity to eligible Phase II
awardees to seek competing continuation Phase II awards for projects in
which the conduct of clinical investigations and federal regulatory
approvals will ultimately be required to realize the potential of the
product being researched and developed. A recipient of an NIH SBIR/STTR
Phase I and Phase II award normally receives no more than $1 million
and three years of support. If the intended commercialized product is a
medical device, drug or biologic, this amount often represents a small
fraction of the funds necessary to complete the studies required for
approval and licensing by the Food and Drug Administration (FDA) or
other federal agencies. Yet, the process of moving promising new
products from bench to bedside typically takes more than a decade.
These are precisely the products with potential to contribute
significantly to the economy of the Nation and to the health of our
nation. It is the intent of the SBIR and STTR Phase 11 competing
continuation grants to support such research and development.
Tracking Program Outcomes. With the completion of the 10-year
retrospective study of the NIH SBIR Program, we are looking forward to
the development of a dynamic project monitoring system to track
outcomes from supported projects. Such a data tracking system will
enable NIH administrators to better determine the outputs and outcomes
from projects supported through the SBIR and STTR mechanisms. Clearly,
commercialization is a major goal of the SBIR and STTR Programs.
However, for NIH awardees, there is often a lengthy time of seven to
ten or even 12 years before commercialization is realized, a period
that routinely extends well beyond NIH support. Thus, commercialization
may be one metric for judging program success, but other measures will
be considered as indicators of success, such as published papers,
patents, FDA testing/approvals of drugs and devices, and the use of the
technology in other research projects.
Enhancing our Outreach Efforts. Communication is ate essential element
of the NIH application, review and award process. Indeed, it is the
common thread that runs through the seven steps a company needs to take
to obtain an SBIR or STTR award. NIH is making efforts to enhance small
business competitiveness through numerous grant writing seminars
throughout the year. We recently provided such a seminar for a rapidly
growing organization called ``Women Entrepreneurs in Science and
Technology.'' NIH also participates in the National SBIR/STTR
Conferences, at least one of which is annually held in a rural state or
a state that has not received a large share of SBIR/STTR funding.
Proposal writing workshops are frequently offered as pre-conference
sessions at these meetings. On June 23-24, 2004, NIH will host its 6th
Annual SBIR/STTR Conference at which over 900 attendees axe expected. A
major feature of this conference is a grant writing session dedicated
to assist potential applicants in preparing a competitive application.
In addition, NIH staff routinely participate in regional and state-
wide conferences to provide information about the NIH application,
review and award processes and potential funding opportunities. Last
June, NIH and about three other agencies participated in the SBIR/STTR/
ATP Workshop in Dallas, an event attended by about 140 participants. We
are looking forward to a similar event in Dallas to be held May 2004.
In response to the heightened interest of research institutions to
learn more about the SBIR and STTR Programs, we have incorporated
sessions focused on university-industry partnership opportunities. We
will continue our efforts to raise awareness in States, and research
institutions within them, to promote the SBIR and STTR Programs. Broad
dissemination of information about these Programs is also being
accomplished through an NIH SBIR/STTR ListServe message system,
encompassing over 11,000 subscribers from the small business community,
academia, State entities, professional societies, and others. NIH
established a separate ListServe of SBIR and STTR awardees to inform
them of important grant-related policies and procedures.
In recent years, many of the agencies participated in a multi-state
outreach endeavor called ``SWIFT: SBIR--Where Innovation Focuses
Technology.'' The Federal Program managers traveled by bus, moving to a
new State each day, to inform small businesses and research
institutions of STTR and SBIR funding opportunities. The first year,
SWIFT I ``Field of Dreams'' tour focused on the Midwest states. In
2001, the SWIFT II ``Patriot'' tour focused on northeast states. SWIFT
III, held in May 2002, kicked off in Texas and moved eastward through
the southern states. Most recently, the SWIFT IV tour visited states in
the upper northwest region of the country. This year, September 2004,
SWIFT V is expected to tour the States of Michigan, Indiana, Illinois,
Missouri, Tennessee, and Kentucky. We are beginning to see the fruits
of these outreach endeavors reflected through higher quality
applications and increased submissions and awards.
NIH SBIR/STTR Success Stories
A number of NIH SBIR and STTR projects have resulted in significant
improvements to our nation's health and in increased productivity of
other researchers. I would like to describe several successes in
particular that exemplify the kind of SBIR/STTR research NIH supports.
Optiva Corporation (WA)
Looking back more than 20 years to one of the earliest SBIR
projects that NIH supported, funding allowed Optiva Corporation to
develop a novel power toothbrush, the Dentifrice Dispensing Sonic
Brush, which we have come to know as the ``Sonicare'' toothbrush. In
addition to the health benefits, this project resulted in a $300
million business and the creation of over 500 jobs. Optiva was sold to
Philips Electronics in 2000.
Plexon Inc. (Dallas, TX)
Plexon Inc. (formerly Spectrum Scientific, a proprietorship),
founded in 1984, supplies tools for basic brain and nervous system
communication research, neural biosensors for drug and environmental
screening, brain-machine interfaces, and neuroprosthetics for the
growing neurotechnology industry. Plexon received Phase I and Phase II
SBIR funding (1989-1993) from the NIH (National Institute of
Neurological Disorders and Stroke) to develop an automated procedure
for detecting and separating extra-cellular neural action potentials
(spikes) in real time. These SBIR awards enabled Plexon to develop a
unique neural data acquisition system far beyond anything previously
attempted at the time. Such an accomplishment has applications to aid
physically impaired individuals.
As shown in the diagram below, individual electrodes implanted in
the brain or mounted in a brain slice culture chamber often detect
spikes from multiple neurons. Each neuron generates characteristically
distinct spike waveform shapes. Plexon's hardware and software
solutions use advanced pattern recognition and cluster analysis
algorithms to discriminate and assign individual waveforms to specific
neurons. In addition to providing insight into basic brain function,
this technology has broad implications in the development of interfaces
for direct brain-machine communication and prosthetic devices for
nervous system-impaired individuals.
By 1995, Plexon had delivered about 10 systems with most sales to
neurophysiologists studying learning, memory, and motor behavior in the
nervous system of animals. Up to this time the average number of
employees at Plexon was three. Interest in the Multichannel Acquisition
Processor (MAP; product name) data acquisition system started to grow,
and by 1999 the number of installed systems world-wide reached 60.
Today, Plexon employs 20 people and sales have reached the $3M/year
mark. Plexon has grown from a small one-person company to a highly
focused team of engineers, biophysicists, and neuroscientists with R&D
and technical expertise. Plexon's customers include over 75 domestic
and international academic research labs, research hospitals,
pharmaceutical companies, and military research labs. The company was
recently named as a participant of a $26 million contract to Duke
University by the Defense Advanced Research Projects Agency (DARPA) for
the development of next-generation brain-machine interface technology.
Joint R&D activities are also being conducted with the University of
North Texas, California Institute of Technology, Massachusetts
Institute of Technology, Vanderbilt University, University of Michigan,
Oregon Health & Science University, and others. Company president,
Harvey Wiggins, notes, ``We have funded our own growth from sales and
never used VC or other equity funding. The number of installed systems
is above 250. Plexon is the primary brain interface equipment supplier
to the major neuroprosthetics research groups in the U.S.''
NanoMatrix Inc. (Dallas, TX)
NanoMatrix Inc. and collaborators at Virginia Commonwealth
University have received SBIR funding from NIH to use a process called
electrospinning to produce a biological and biochemical environment
that biomimics that found in normal tissues and organs. The Company's
core technology of electrostatic spinning of connective tissue proteins
is aimed at mimicking the three dimensional architectural structure
that is essential for the body's natural growth and repair processes.
For example, Dr. Gary Bowlin, bioengineer at VCU notes that ``patients
do not always have spare veins for bypass surgery, and even when they
do, complications can arise due to rejection. What is needed is an
``off-the-shelf' blood vessel of known size and characteristic. The new
technology would enable natural human blood vessels to be grown from
collagen. Collagen is a natural substance in the body, so cells are in
a happy environment and start to grow.'' The technology was licensed to
NanoMatrix for further development. In addition to the cardiovascular
applications, this potentially revolutionary technology offers numerous
other possibilities--for diabetic patients who often lose blood vessels
due to vascular disease, for skin replacement, and for bone
regeneration. The following link provides a video that demonstrates the
potential of this technology for living coronary artery: http://
www.nanomatrix.biz/demo.asp
MicroFab Technologies, Inc. (Plano, Texas)
MicroFab Technologies, Inc. has used SBIR funding to develop and
commercialize new technology aimed at enabling high-payoff applications
for microdispensing and precision printing of bioactive materials (DNA,
proteins, reagents) and other materials used in biomedical device and
diagnostics manufacturing. The figures below illustrate biosorbable
polymer conduits for nerve regeneration (1mm diameter) and 1mm
stainless steel tubes that mimic stents (for cardiac artery implant)
printed with a polymer/drug coating (fluorescent die used). SBIR
funding from NIH and other federal agencies has led to both direct and
indirect commercialization of biomedical applications. Direct
commercial success includes sales of equipment for DNA array
manufacturing and instrumentation for proteomic discovery. Indirect
commercialization success includes application of equipment and
processes developed in a tissue engineering project (nerve regeneration
conduits) to coating of stents with polymers and drugs for six
commercial companies.
Conclusion
Thank you for the opportunity to describe how NIH has utilized the
Programs and benefited from them. I would be pleased to answer any
questions you may have.
Biography for Jo Anne Goodnight
Ms. Goodnight currently holds the position as the Small Business
Innovation Research (SBIR) and Small Business Technology Transfer
(STTR) Program Coordinator of the National Institutes of Health (NIH)
and the Department of Health and Human Services (DHHS) Public Health
Service. She has held this position, which is located in the NIH Office
of Extramural Research (OER), Office of the Director, since March 1999.
Prior to joining OER, she served in positions encompassing research,
program administration and program management. During nearly 20 years
of Government service she has held positions in the U.S. Department of
Agriculture (USDA), the Food and Drug Administration, and now the NIH.
As part of her Virginia Tech education (1978-1983), she spent four
years conducting research as a Cooperative Education student at the
USDA's Animal Parasitology Institute. While at NIH, she has been a part
of the National Cancer Institute's (NCI) Intramural Research Program as
a research scientist (1989-1994) and the NCI's Extramural Research
Program (1994-1999). As an intramural scientist, she published over 20
studies about the selective involvement of Protein Kinase C in
differentiation and neoplastic transformation. She joined the NCI's
Extramural Research Program in 1994 where she served as a Special
Assistant to the Director, Division of Cancer Biology and Program
Director for SBIR/STTR grants that supported studies in the field of
cancer biology, cancer genetics, and cancer immunology as well as the
SBIR/STTR Program Policy Coordinator for the entire NCI. She was
appointed as the NIH SBIR/STTR Program Coordinator in 1999 where she
continues today.
She was intimately involved in the development and implementation
of the NIH SBIR/STTR Fast-Track Program and continues to develop other
programs that assist the small business community in commercialization
of their technologies. She has been an invited participant in numerous
SBIR/STTR Conferences to discuss funding opportunities for small
businesses through the NIH. She also has provided written and oral
testimony at Congressional hearings related to the reauthorization of
the SBIR and STTR Programs.
Ms. Goodnight has received several national awards including an NIH
Merit Award (1998) for her ``exemplary contributions in the
administration and coordination of the extramural research programs of
the Division of Cancer Biology,'' a Tibbetts award (2002) from the
Small Business Administration for her ``leadership role in making the
SBIR and STTR programs more accessible, more relevant, and more
effective,'' and an NIH Merit Group Award (2003) in ``recognition of
outstanding performance and service to the National Heart Lung and
Blood Institute's SBIR Evaluation Group.''
Ms. Goodnight received a Bachelor of Science degree in Microbiology
from Virginia Tech in 1983.
Chairman Smith. Thank you.
Dr. Feng, good to see you.
STATEMENT OF DR. DA HSUAN FENG, VICE PRESIDENT FOR RESEARCH AND
GRADUATE EDUCATION, PROFESSOR OF PHYSICS, UNIVERSITY OF TEXAS
AT DALLAS
Dr. Feng. Chairman Smith and Congresswoman Eddie Bernice
Johnson, first I want to commend you for the leadership of
bringing SBIR and STTR so much on the radar screen for the
region. I'm also honored to be invited here.
The University of Texas of Dallas aims to be a regional and
national economic engine, with strengths in intellectual
information technology, nano technology, biotechnology,
especially brain research and sickle cell research, which
Congresswoman Eddie Bernice Johnson has played an enormous role
in assisting us in building that program.
It is also geographically situated in one of the most
technological centers and economical volatile regions of the
United States at the moment, the Dallas-Fort Worth region.
Therefore, as a member of the UTD's Senior Management Team, it
cannot be more timely for me to participate in this hearing on
a subject with obvious and enormous impact, to say a few words
about it, and to learn from my colleagues and from you.
I also want to specifically, since I see there are many,
many small company executives here, I would like to welcome you
to communicate with me to see how the University of Texas at
Dallas, who has been very enthusiastic about working with you,
like the way you have been working with Polatomic, so that we
can go on with developing more economic prosperity around this
region.
Mr. Chairman, it has often been stated that the economic
livelihood of our nation lies in small businesses. Time and
again, small businesses were the source of innovation agility.
One simply cannot take small businesses for granted when
talking about economic development.
Mr. Chairman, I have also often said, and I cannot recall
who was the first who say that, that vision without funding is
hallucination. The very first barrier that these small
technological businesses encounter would be to find suitable
funding. In principle, they could seek venture capital or angel
funding, or any kind of business venture funding, this is at
best an arduous search for start-up small companies who need
research dollars. This is why SBIR and STTR are so critical.
From a research university perspective, suitable
collaborations between industry and university partners have
long been understood as being critical to the ongoing success
of universities. What is only recently being understood is that
the powerful potential of partnering with small businesses, as
defined as having fewer than 500 or 400 employees, with
universities and SBIR and STTR programs.
As Vice President for Research at one of the fastest
growing research universities in the Metroplex, I am immensely
pleased to say that nowadays there is more and more recognition
of this collaborative potential among my colleagues within the
university.
Mr. Chairman, the telecom business in the `90's was
certainly an economic boom for the region, a significant
fraction of our most scientifically and technologically
talented manpower worked for many of the powerful mega and
international telecommunication companies in the Metroplex.
Since this implosion in 2001, many of these talented
individuals had to find ways to sustain their livelihood, for
those who continued and probably struggled to remain in the
region many managed to form start-up companies. It is probably
a cruel fact of life that the downturn of the telecom economy
also means that the expertise of these talented individuals
that accumulated while working for the mega companies was
perceived to be of little or no direct economic values.
And, Mr. Chairman, we all know that perception is reality
in the real world. Hence, the successful ones tends to leverage
the expertise to significantly add values to the other
businesses and other industries. Obviously, to do so they
needed to be in a research collaboration with individuals who
have different expertise and who can do many of the laboratory
studies which small start-up businesses will have a difficult
time in accomplishing.
One source of such research talents clearly lies in
research universities. Mr. Chairman, it is for this simple fact
that made small business and research universities such good
partners, and I, as Vice President for Research, am committed
to bring this about as much as I can.
As I mentioned earlier, the ability of research
universities to act as partners to small companies gives
students and faculty an opportunity to explore possibilities
for products or ideas developed by small companies. The idea
that Polatomic has been on campus for over 15 years has been an
enormous intellectual source for our faculty and for our
university in general.
While a small company is certainly capable of doing of this
research, it is more cost effective and intellectually exciting
to partner with outstanding university researchers who also
have access to brilliant young minds called graduate students.
The SBIR grants are an invaluable way for small businesses
looking to develop these partnerships, because they provide the
economic ability to continue research with the assistance and
resource of a university.
Finally, Mr. Chairman, the SBIR and STTR provide many
powerful opportunities to small businesses. The program can
find early-stage development projects that might otherwise not
get funding, as well as an option to research ideas, reduce the
risk, and to gather the data, test information needed to
attract venture capital funding eventually.
A university can provide valuable assistance to small
companies in making both of these objectives a reality. The
companies are strengthened for the work the universities do,
and the universities are strengthened because the students and
faculty get a chance to do a variety of diverse and
intellectually-exciting and challenging projects.
Thank you, Mr. Chairman.
[The prepared statement of Dr. Feng follows:]
Prepared Statement of Da Hsuan Feng
Chairman Smith and Congresswoman Eddie Bernice Johnson:
First, I want to commend you for your leadership. I also am honored
to be invited here today to give a testimony about SBIR and STTR. The
University of Texas at Dallas aims to be a regional and national
economic engine. It is geographically situated in one of the most
technological-centric and economic volatile regions of the United
States, the Dallas-Fort Worth Metroplex. Therefore, as a member of
UTD's Senior Management team, it cannot be more timely for me to
participate in this hearing on a subject with obvious and enormous
impact, to say a few words about it and to learn from my colleagues and
from you.
Mr. Chairman, it has often been stated that the economic livelihood
of our nation lies in ``small businesses.'' Time and time again, small
businesses were the source of innovation agility. One simply cannot
take small businesses for granted when talking about economic
development.
From a research university perspective, sustainable collaborations
between industry and university partners have long been understood as
being critical to the ongoing success of universities. What is only
recently being understood is the powerful potential of partnering small
businesses--as defined as having fewer than 500 employees--with
universities and the Small Business Innovation Research (SBIR) and
Small Business Technology Transfer (STTR) programs. As Vice President
for Research of one of the fastest growing research universities in the
Metroplex, I am immensely pleased to say that nowadays there is more
and more recognition of this collaborative potential.
Mr. Chairman, the telecom business of the Nineties was certainly an
economic boom for our region. A significant fraction of our most
scientifically and technologically talented manpower worked for many of
the powerful mega- and international telecommunication companies in the
Metroplex. Since its implosion in 2001, many of these talented
individuals had to find ways to sustain their livelihood. For those who
continued, and probably struggled, to remain in the region, many
managed to form startup companies.
It is probably a cruel fact of life that the downturn of the
telecom economy also means that the expertise of these talented
individuals that accumulated while working for the mega-companies was
perceived to be of little or no direct economic values (and Mr.
Chairman, we all know that ``perception is reality'' in the real
world!). Hence, the successful ones tend to leverage their expertise to
significantly add values to other businesses. Obviously, to do so, they
needed to be in research collaboration with individuals who have
different expertise and who can do many of the laboratory studies which
small startup businesses will have a difficult time accomplishing. One
source of such research talents, clearly, lies in research
universities. Mr. Chairman, it is for this simple fact that made small
businesses and research universities such good partners.
Mr. Chairman, I have often said (and I cannot recall who was the
first to say this) that ``VISION WITHOUT FUNDING IS HALLUCINATION.''
The very first barrier these small technological businesses encountered
would be to find suitable FUNDING. In principle, they could seek
Venture Capital (VC) or Angel Funding, or any kind of ``business
venture'' funding. This is at best an arduous search for startup small
businesses who need ``research dollars.'' This is why SBIR's and STTR's
are so critical.
As I mentioned earlier, the ability of universities to act as a
research partner to small companies gives students and faculty an
opportunity to explore possibilities for a product or idea developed by
a small company. While a small company is certainly capable of doing
some of its research, it is much more cost-efficient, and
intellectually exciting to partner with outstanding university
researchers, who have access to brilliant young minds (call graduate
students). The SBIR grants are an invaluable way for small businesses
looking to develop those partnerships because they provide the economic
ability to continue research with the assistance and resources of a
university.
During the fiscal year 2002, fewer than 20 companies in North Texas
applied for SBIR grants--540 grants with a total of $106,844,952--were
awarded to Texas companies. In contrast, 2,394 grants, with a total of
$598,525,294, were awarded in California. This contrast suggests a lack
of understanding in the program by Texas small businesses. As small
business becomes familiar with many advantages of the SBIR program,
universities will be able to use their research talents to assist small
businesses and make them more economically viable while strengthening
the educational opportunities of both faculty and students.
Finally, Mr. Chairman, the SBIR and STTR provide many powerful
opportunities to small businesses. The program can fund early stage
development projects that might otherwise not get funding as well as an
option to research ideas, reduce the risk and to gather the data/test
information needed to attract venture capitalist funding. A university
can provide valuable assistance to small companies in making both of
those objectives realities. The companies are strengthened for the work
the universities do and the universities are strengthened because the
students and faculty get a chance to do a variety of diverse projects.
Biography for Da Hsuan Feng
Vice President for Research and Graduate Education and Professor of
Physics, University of Texas at Dallas
After completing his elementary and secondary education in the
Republic of Singapore, Dr. Feng received his undergraduate education
from Drew University in New Jersey and doctorate in Theoretical Physics
from the University of Minnesota. Prior to joining the Physics
Department of Drexel University in 1976, where he eventually became the
M. Russell Wehr Professor of Physics, he was a United Kingdom Science
Research Council fellow at the Department of Theoretical Physics of the
University of Manchester (1972-74) and a Senior Scientist at the Center
for Nuclear Studies of the University of Texas at Austin (1974-76).
During his tenure at Drexel University, he served for two years as
Program Director of Theoretical Physics at the National Science
Foundation (1983-85) and visiting Professor of the Niels Bohr Institute
of the University of Copenhagen (1979-80).
Feng is an expert in mathematical physics, nuclear physics, nuclear
astrophysics, quantum optics, fundamental issues of quantum mechanics,
network architecture and computational physics. He has been a
consultant to the theoretical physics groups of Los Alamos National
Laboratory, Oak Ridge National Laboratory, Brookhaven National
Laboratory and United Kingdom's Daresbury Laboratory.
In 1997-1998, Feng served as technical advisor to Congressman Curt
Weldon, currently Vice Chair of the House Armed Services and senior
Member of the House Science Committee, regarding South Africa, Central
Europe, (especially Hungary) and China. He was a member of the
Congressional Delegation to East Asia (January and March of 1997) and
Central Europe in December of 1999.
From April of 1998 until December of 2000, he was on leave-of-
absence from Drexel University to serve as the Vice President and HUBS
(Hospitals, Universities, Businesses and Schools) General Manager of
Science Applications International Corporation (SAIC), a multi-
national, $6.1 billion and 41,000 employees Fortune 500 high technology
company.
From 1998-2000, Feng worked on the HUBS project. The HUBS project
was inspired by the political leadership of the ``Four States''
(Delaware, New Jersey, Maryland and Pennsylvania) and is designed to be
the catalyst and the integration of information systems in that region.
From FY98 to FY03, the project received over $60 million of federal
funding.
On December 9, 2000, Feng resigned from both Drexel University and
SAIC to assume the position of Vice President for Research and Graduate
Education and Professor of Physics at the University of Texas at
Dallas.
Feng's objective at the University of Texas at Dallas, as
designated by the President and the Provost, is to rapidly build the
research breath and depth of the University. As the first VP for
Research and Graduate Education, Feng devised the following mission
statement for his position:
``The Office of the Vice President for Research and Graduate
Education of the University of Texas at Dallas (UTD) identifies
areas of intellectual importance, promotes the university as an
economic and innovation engine as well as further activates
UTD's development as a world class university. In addition, the
office promotes the university's ``knowledge'' products and
collaborates synergistically with local, regional, national and
international corporations and governments to enhance the
global vision and impact of science and technology.''
The goal is to drive the University to be a major international
research University. Taking into account the size of UTD and resources,
he articulated three concentrations of excellence for UTD in this
decade: digital communications, advanced materials and instrumentations
and last but not least, disease centric post genomic research.
Feng is responsible for successfully recruiting and securing the
funds for the James Von Ehr Distinguished Chair in Science and
Technology for Dr. Alan MacDiarmid, the 2000 Nobel Laureate in
Chemistry. He also painstakingly recruited the nanotechnology research
team of Honeywell Corporation in New Jersey. This team is now the
backbone of UTD's rapidly growing nanoscience program. In addition,
Feng also initiated a SPRING (Strategic Partnership of Research in
Nanotechnology) project, which linked together, besides UTD, Rice
University, the University of Texas at Austin, the University of Texas
at Arlington. For FY03 and FY04, Feng worked closely with the
Congressional delegation of Texas to secure $6 Million and $10 Million,
respectively, for SPRING funding. He also founded the Medical Device
Action Group, a regional effort to promote interdisciplinary research
in this technological arena. Research funding for UTD increased from
$16 Million to $28 Million during the past three years.
Very recently, he recruited Dr. Russell Hulse, Nobel laureate in
physics in 1993, as a Visiting Professor of science and technology to
UTD.
Feng has published more than 190 scientific papers, edited more
than 20 books, mentored five Ph.D. students and four post-doctoral
fellows, and served as editor of four scientific journals.
Feng's other professional affiliations include:
Past-President of Monte Jade Science and Technology
Association of Mid-Atlantic States, a rapidly growing chapter
of a national organization of Chinese Americans entrepreneurs,
with over 300 multi-national corporation as members
Business Board Chairman of D'Trends Inc,, a leading
Bio-informatics company in San Ramon, California
Special advisor to the Editor-in-chief of Korean
American Science and Technology Network (which is read by
15,000 Koreans globally)
Member of the Industrial Advisory Board of the
Interactive Multimedia Intelligent Tutoring Center of Temple
University
Former member of the Computer Science/Engineering
Technical Evaluation Advisory Task Force of the Provost and
President of the University of South Carolina
Former member of the United States Department of
Education (2000) Field Initiated Studies Technology Panel
Special advisor to the Greater Philadelphia
Association of Chinese Computer Professionals, a fast growing
association of this community in the region
Past Vice Chairman of the Board of CyberFone Inc.
Board member of the Texas Nanotechnology Initiative
Vice Chairman of the Board of the Alan G. MacDiarmid
Institute of Jilin University
Advisor for the National Engineer Week Asian American
Award Banquet (Feb. 23, 2002, Dallas)
Honorary Advisor of the Chinese Institute of
Engineers/USA-DFW and Association of Chinese Professionals
(DFW)
Honorary/Guest professor of Jilin University, Fudan
University, Lanzhou University, Southwest Jiaotong University,
Nanjing University
Honorary Research Fellow of the Institute of Nuclear
Research (Shanghai)
External Advisory Board of the Chinese Institute of
Engineers/USA-GNYC
Technical Advisory Board, Taiwan Nanotechnology
Initiative
Serve as the University Coordination Co-chair for the
Space and Missile Defense Command Technology Center in
Huntsville, Alabama.
Science Advisor to New Economy Strategies
Member of the International Advisory Committee of
International Conference on Advanced Materials for Technologies
2003
Member of the International Organizing Committee of
the International Conference on Physics Education & Frontier
Research 4th OCPA Joint Meeting of Chinese Physicists World-
Wide
2003 Member of the University of Texas Chancellor's
Higher Education Act Working Group
Chairman of the ``Ad Hoc Southern United States
Action Committee to Assist Chinese People to Fight Against
SARS''
Vice President (for North America) of the American
Europe Academy of Sciences
DFW MIT Forum Advisory Board member
International Steering Committee (ISC) of
International Network for Engineering Education and Research
(iNEER)
Member of the Scientific Board of Advisors of Genesis
Campus, an accelerator and early stage venture capital firm
Recent awards include:
In 1996, Feng was elected ``Fellow of the American
Physical Society'' ``For outstanding contributions to the
understanding of nuclear structure physics, particularly for
the applications of the coherent states to physics and nuclear
physics''
Distinguished Friend of Chung Yuan Christian
University (Taiwan)
1999 Millennium Award for Vision and Leadership in
Technology, TechFEST '99 in Allentown, Pennsylvania
1999 Delaware Valley (Pennsylvania) Technical
Recruiting Network TECHIE Award
2000 Institute Service Award of the Chinese Institute
of Engineers-USA (CIE-USA)
2000 Distinguished Alumni Award from his alma mater
Drew University of Madison, New Jersey
2001 Science and Technology Award of the Greater
Dallas Asian American Chamber of Commerce
2002 DFWTechbiz twelve persons to watch list
2002 Life Time Achievement Award from the Association
of Chinese American Professionals
Recipient of the 2003 Inside Collin County (Texas)
Business 21 for the 21st Century award
Honorary member of the Board of Trustees of Nanjing
University
Dallas Section of IEEE 2003 Chairman Award for
``outstanding promotion of engineering awareness and
research.''
Chairman Smith. Thank you, Dr. Feng.
Dr. Slocum.
STATEMENT OF DR. ROBERT E. SLOCUM, CHAIRMAN AND CHIEF TECHNICAL
OFFICER, POLATOMIC, INCORPORATED, RICHARDSON, TEXAS
Dr. Slocum. Chairman Smith and Congresswoman Johnson, it's
a great pleasure for me to be here to present testimony on the
SBIR program, because it's become a very significant part of
our--at Polatomic. It's permitted the formation of a world-
class research and development team to solve what I call large
company problems of significant national interest in a small
company environment.
I'd like to direct my comments today to that part of the
hearing entitled on the challenges of enhancing small business
competitiveness in the Dallas area, and I refer to this as
promises and perils. I'll begin with the promises of the SBIR
program, and if I could have the slide up, please.
Polatomic is proud of its record for developing SBIR Phase
I and Phase II contracts. However, competitiveness must be
judged by successful transitions to Phase III projects, such as
those that might show up here in a minute.
Mr. Chairman, let me just point out one of these, the Phase
III project now in progress for the AN/ASQ-233 submarine
detection center. The Multi Mode Magnetic Detection System
using this system was designed in response to the Chief Naval
Operations Initiative for guiding an unmanned aerial vehicle to
deliver a torpedo on a shallow water submarine, the submarine.
ONR awarded us in late FY03 an $11.4 million contract under
Littoral Antisubmarine Warfare Future Navy Capabilities
Project. Estimates of the worldwide sales for this system is
between $500 million and a billion dollars, based on past
experience. This is promise.
Now, let me turn to the perils shown in our next slide. The
peril number one for an SBIR company is funding fluctuations or
line item budget instabilities, once you get Phase III. Our $11
million contract was to have FY04 funding of $5.5 million in
August, by September it was set to $3.5 million, by October
$1.5, and by the end of December $.5 million. The funding
decreases of this kind are very destructive for a small
company, it must recruit the staff and obtain the facilities to
perform a $5 million job, and then have the funding in that
way.
It would be helpful to have a cooperative venture between
the Small Business Administration, SBIR and the Navy, and DoD,
to establish buffer zone funding to restore Phase III funding
for promising SBIR projects.
Now, peril number two is predatory moves by large foreign
and U.S. companies that attempted to do what I call ``roll
overs,'' to take the technology away from you for free or,
basically, put the small business out of business. Polatomic
learned in December that a Canadian defense contractor, CAE,
with sales greater than $1 billion, was attempting to persuade
the Navy to replace us in the MMNBS project with CAE, although
they have never demonstrated any comparable magnetic detection
technology. Their proposal is basically that our $11 million
contract be cancelled, that CAE come in and be allowed to catch
up, to develop a new sensor from 30-year old technology to
compete with us, and ONR and NAVAIR is supposed to support them
in doing this work. It allows CAE to make a foreign company
non-competitive buy-in to the U.S. antisubmarine warfare
market, based on a CAE promise to use their company money, up
to $9 million, to buy into this program.
If this happens, and the CAE proposal is accepted, it will
eliminate a U.S., SBIR, small business, with outstanding
performance, in a system that's preparing for a fly test that
meets all requirements in this fiscal year. It will present
major technical and cost risks to the Navy, and it will force
the Navy to abandon a national magnetic asset, Polatomic, and
get a new technology from Canada.
It is a sole-source magnet, it's a supplier of a 30-year
old design, and most important to the Dallas area it will
permit moving $500 million to a billion dollars in sales to a
foreign country.
To put it in simple terms, Polatomic is faced with the task
of defending an outstanding Phase III SBIR program, set for
transition to the fleet from an attack by a Canadian company--
Canadian government, attempting to buy into the U.S. market
with Canadian dollars that could have been used to support the
U.S. effort in Iraq.
In the face of a threat like this, of this magnitude, who
can help us? That's the question.
In conclusion, I'd like to say that for an SBIR program to
get full return on its investment, and provide maximum economic
benefits for the Dallas area, the SBIR small business must make
successful product transitions to Phase III and also
manufacture its products. To paraphrase Dr. Feng, SBIR Phase I
and Phase II vision without Phase III funding is a
hallucination. In order for Polatomic to be competitive and
recapture the $1 billion Navy magnetic protection business from
CAE, and bring the business to the Dallas area, the Small
Business Administration, the Navy, SBIR and congressional
support is needed to see that this threat is countered and the
Phase III transition money is provided to carry on with this
excellent Phase III project.
The SBIR program can be a significant element for moving
Dallas toward a vision of fulfilling the biblical mandate that
every person has daily work for dignity and fair rewards to
care for your family. It can support the coupling of a vision
of Committee Member Johnson and local leaders such as Albert
Black and Don Williams, for building high-tech small businesses
from the resources of the City's southern sector, and at the
same time coupling into the vision of building high-tech small
business from the ruins of the telecom nuclear winter out in my
area of North Dallas.
I want to express my appreciation to the Committee for this
chance to share this with you.
[The prepared statement of Dr. Slocum follows:]
Prepared Statement of Robert E. Slocum
Testimony on the Small Business Innovation Research (SBIR) Program
and the related Small Business Technology Transfer (STTR) Program, and
to learn more about the opportunities that these programs offer to
small businesses in the Dallas area.
1. Describe the research that Polatomic received SBIR funding to
perform. The primary area of research at Polatomic funded by ONR and
NASA is advanced laser magnetic field measurement systems. Polatomic
has advanced the state-of-the-art for magnetic field sensors used for
detecting submarines (Airborne Antisubmarine Warfare), countermeasures
for locating and protecting ships from buried sea mines (Mine
Countermeasures), protecting the U.S. fleet with undersea magnetic
sensors (Undersea Surveillance) and magnetic instruments for space
research (NASA Planetary and Earth Science programs). Polatomic has
become the world leader in laser magnetometers. A second research area
supported by SBIR funding is research and development of metal
nanostructures for polarizing light and biohazard detection nano chips
(Telecom and laboratory polarizing optical filters and Homeland Defense
biohazard detection).
2. Do you consider Polatomic's SBIR-funded project to have been
successful? Yes, very successful technically but the jury is still out
on transitioning to fleet Navy hardware capable of fording quiet subs
in shallow waters or replacing dolphins in mine hunting. Under SBIR
sponsorship Polatomic has emerged as the world leader and a national
asset in the area of laser magnetic detectors. Polatomic is
transitioning this technology to solve significant U.S. Navy problems
in the fleet and solve NASA instrumentation problems for significant
space missions and Earth science investigations. Polatomic developed an
optical coating that polarizes light that is used to fabricate optical
filters sold through international distribution. Development of the
polarizing coating led to formation of a spin off company, Integrated
Photonics, Inc., formed with five former members of the Materials
Division of Bell Laboratories. Continued SBIR support over the last
fifteen years has enabled Polatomic to achieve steady growth as a small
business in the Telecom Corridor of Richardson, TX, where up to 100,000
jobs were lost in the Telecom sector. The SBIR program will allow
Polatomic to recapture the DOD Magnetic Detection business lost by
Raytheon and reclaim the possible $1 billion in revenues for the Dallas
area if transition money is reinstated.
The SBIR awards enabled Polatomic to attack and solve large-
company problems in a small company environment with university
collaboration such as University of Texas-Dallas NanoTech Institute. On
January 20 a collaborative SBIR proposal with the Nano-Tech Institute
of the University-Dallas was submitted to NSF for a Biohazard detection
nanochip. Polatomic now collaborates with UT-D whenever possible but in
the past has included Caltech, University of Missouri-Rolla and the
University of Central Florida and the Optical Science Center of the
University of Arizona.
3. Has Polatomic commercialized any of the technologies developed
under the SBIR program? Polatomic is proud of its record for research
and development of technology under Phase I and Phase II SBIR
contracts. The success of these projects can be judged by the
successful transitions to Phase III projects that are aimed at further
transitions to the Navy fleet, NASA space missions and commercial
products. Highlights of the Phase III SBIR accomplishments include the
following:
$11 million FY04 award for Multi Mode Magnetic
Detection System using Polatomic AN/ASQ-233 for guiding an
unmanned aerial vehicle to deliver a torpedo on a shallow water
submarine. Agency--Office of Naval Research under Littoral
Antisubmarine Warfare Future Naval Capabilities project. Note
that selection for ONR FNC project indicates intention to
transition to the fleet. Laser magnetometer flight
demonstration in Navy P3-C showed sensitivity improved by a
factor of 30 over current Navy Magnetic Detector Set AN/ASQ-81.
$6.7 million FY04 award for a laser magnetometer
system for Undersea Surveillance. Agency--Office of Naval
Research under Littoral Antisubmarine Warfare Future Naval
Capabilities project for Seaglider/Distributed Autonomous
Detection System for fleet perimeter defense.
$25 million FY02 award for IDIQ Contract. Agency--
Naval Air Systems Command for Phase III contracts; used by Navy
and DARPA for Underground Facilities Detection tests.
$1.4 million Instrument Incubator Program for space
magnetometer development. Agency--NASA Division of Earth Solid
Earth and Earth Hazards. Selected for space flight instrument
development in FY05 under New Millennium Program.
Polatomic Laser Space Magnetometer selected by Jet
Propulsion Laboratory for ``Inside Jupiter'' Mission proposal
to NASA (in progress).
4. How critical has the SBIR program been to Polatomic's growth and
success? The SBIR program has been a critical factor for the growth and
success of Polatomic, Inc. SBIR awards have enabled Polatomic to start
with a single person in 1982 and assemble a highly qualified team of
scientists and engineers to attack and solve high priority ``large
company'' problems in a ``small company'' environment without
significant outside venture capital investors. Since DOD and NASA
acquisition cycles are relatively slow for new sensor systems (Navy)
and space instruments (NASA), conventional venture investors pull back
from slow payback investments and push elsewhere for rapid returns on
their investments. SBIR is viewed by Polatomic as a patient investor
interested in providing advanced technology solutions to very
significant problems for the Government and commercial customers.
Polatomic also sees SBIR as an investor deserving a significant return
on their investment in terms of major problems solved and commercial
successes benefiting the DFW area. During Polatomic's first decade
(1982-1991), local business, university and government leaders in
Richardson, TX, had their attention and resources focused on recruiting
large Telecom companies such as Nortel and Alcatel. Very little energy
was left for nurturing small businesses and the SBIR program filled
that gap. Following the Telecom ``Nuclear Winter'' and elimination of
tens of thousands of Telecom jobs, small high tech businesses in the
North Dallas area represent a significant path to recovery that can
become a leader for technology growth in other sectors of the city. The
Phase I and Phase II contracts and grants have enabled Polatomic to
solve problems left unsolved by other major U.S. corporations, and the
Dallas area will receive the financial benefits of this success.
5. Have you encountered any conflicts between the research goals of
the federal agency that issued Polatomic the SBIR grant and the
business plan of your company, and if so, please describe? The key to
success is understanding your customer's problem, then proposing and
executing an innovative yet reasonable solution within the available
budget and schedule. Large company experience helps to keep this
``customer focus.'' Agreement about the research goals and desired
results is not the problem. The problem is the schedule and funding for
reaching these goals. Government customers have all the time in the
world relative to a small company. Funding gaps and delays between
Phase I and Phase II can be as much as six months to a year, and even
longer for Phase III projects. This can be disruptive or sometimes
fatal to a small company.
6. What recommendations do you have for ways to improve the SBIR
program, and if so, what are they? The SBIR system is very workable
``as is'' although the ever expanding size of the program is creating
periodic delays and snags. One major problem is the long gap (six
months or more) between the conclusion of Phase I and the award
announcements for Phase II. It is often difficult to hold a team
together through this funding gap. Preparation of a winning proposal
for small businesses new to the SBIR process is a fairly complex and
confusing exercise. I propose that ``entry level SBIR'' small
businesses could use help getting started from funded local or state
SBIR organizations and business schools working in conjunction with
successful SBIR winners who serve as consultants and mentors.
Preliminary state or regional funding to get these new businesses
trained would improve the SBIR success rate for the Dallas area.
In order for the SBIR Program to get the full return on its
investment and provide maximum economic benefits for the Dallas area,
the SBIR small company can use some additional protection at the Phase
III project level, particularly for Phase III transition programs
within DOD. The two prominent problem areas are erratic and unreliable
funding for Phase III contracts with DOD agencies that are currently
(FY04) experiencing large fluctuations in funding. The second area
where help would be appreciated is small business protection from
attempts by large U.S. and foreign companies who attempt to ``roll
over'' Phase III small businesses to capture superior competing
technology developed under SBIR awards or put a small business out of
business. Two case studies can be taken from the following two current
challenges faced by Polatomic:
Example #1--A major problem is transition from Phase
II to a successful Phase III program. Polatomic proposed and
was awarded a Phase III ONR Contract for $11 million with $5.5
million in first year that was reduced to $3.5 million before
start of FY 2004 and by the end of December 2003 was reduced to
$0.75 million. The budget fluctuations reflect the reality of
the cost of the Iraq engagement, but it is costly and
destabilizing for a small company that must recruit staff and
obtain facilities to prepare to perform on the contract and
then have the funding recalled or slipped into the out-years.
It would be very helpful to small businesses receiving Phase
III contracts if a ``funding buffer zone'' could be created to
stabilize DOD budget line items intended to fund Phase III SB1R
projects that represent true advances in the state of the art
and are slated to transition to the fleet.
Example #2--Predatory moves by large foreign and U.S.
companies to attempt ``roll overs'' are a serious threat to the
success of Phase III SB1R efforts. The Polatomic ASW laser
magnetometer has been selected for the Office of Naval Research
Future Naval Capabilities Program in Littoral Antisubmarine
Warfare and an $11 million contract has been signed with
Polatomic. Polatomic learned in December 2003 that a Canadian
defense contractor (CAE) with sales greater than $1 billion is
trying to persuade the U.S. Navy to cancel the contract won
competitively by Polatomic and award it to them even though
they have not demonstrated any comparable magnetic detection
technology. This proposal from CAE to the Navy will allow CAE
to buy into the U.S. advanced ASW market by spending CAE
company funds (a significant fraction of the $11 million
Polatomic contract) to obtain U.S. Navy sponsorship and
guidance to try to bridge the 25 year technology gap between
CAE and Polatomic. This is a risky attempt to catch up with the
Polatomic AN/ASQ-233 developed under SBIR sponsorship. By
making the change from the Polatomic AN/ASQ-233 (to be flight
tested this fiscal year) and starting over with CAE, the Navy
would incur schedule delays and raise performance and cost
risks to acquire a system technically inferior to the Polatomic
AN/ASQ-233. By selecting CAE the Navy would eliminate Polatomic
as a small business supplier of a truly advanced MMMDS System
and shift the magnetics detection technology base to Canada
beyond U.S. Navy control. By shifting this technology to
Canada, the Dallas area will lose the potential of $500 million
to $1 billion in revenues to Canada. Put in simple terms,
Polatomic is faced with the task of defending an outstanding
Phase III Navy SBIR FNC transition program from attack by a
Canadian company subsidized by the Canadian government
attempting to buy into the U.S. ASW market with Canadian
dollars that could have been used to support the U.S. efforts
in Iraq. In the face of a threat of this magnitude to
Polatomic, who can help us?
7. How would you rate the level of technical and administrative
support that Polatomic received throughout the SBIR grant process?
Overall, the SBIR staffs assigned to our grants and contracts have done
a very good job considering the limitations of their particular agency.
The surprise is the large number of people in the SBIR program with a
true passion to help small businesses succeed. I have been fortunate to
work under sponsors such as Carol Van Wyk (Naval Air Systems Command)
and Ritchie Coryell (National Science Foundation) who are deeply
concerned with the success of high performing, small companies who are
recipients of SBIR grants and contracts. The administrative process for
submitting proposals and reporting progress is adequate. A major source
of problems has come from the edict requiring Internet submission of
proposals through Government web capabilities that are inadequate,
resulting in jam-ups and delays. The Grantee Training Conferences
sponsored by NSF is worthwhile even for experienced SBIR participants.
I propose that this type of pre-proposal conference be held in the
Dallas area on a regular basis to cover Phase I, Phase II and Phase III
program and proposal success. I would also propose that our SBIR
advocates participate in the Phase III transition phase funding
decisions at the FNC level to insure continuity.
Biography for Robert E. Slocum
Robert E. Slocum founded Polatomic, Inc., in 1982 and serves as
Chairman and Chief Technical Officer. His technical specialty is
application of atomic and nuclear physics to magnetic and optical
instrumentation. He is also a consultant in the area of strategic
planning and new product development. He specializes in development of
helium magnetometers and the application of solid state lasers for
optical pumping sources. Polatomic has been awarded more than thirty
SBIR contracts by NASA/JPL, the Naval Air Systems Command, the Naval
Sea Systems Command, the National Science Foundation, and the US
Special Operations Command. Dr. Slocum has served as Principle
Investigator for each of these contracts. In November 1991, NASA
selected Polatomic to design and prototype the scalar helium
magnetometer (SHM) for the Cassini mission to the planet Saturn. From
1959 to 1982, Bob worked at Texas Instruments. He served as Project
Physicist on the low-field helium magnetometer flown on the Mariner IV
and V Spacecraft and directed production research for the AN/ASQ-81
helium magnetometer sensor. Dr. Slocum is the inventor of the diode
laser-pump source for helium magnetometers, the nuclear free precession
Helium 3 magnetometer and the Planar Thin-Film Polarizer. He holds
patents on these devices and has published numerous papers on optically
pumped magnetometers, including an invited paper on the past and future
of resonance magnetometers presented at the International Magnetics
Conference. Bob received his BS in 1960 and M.E.P. in 1963, both in
Engineering Physics from the University of Oklahoma. He received his
Ph.D. in Atomic Physics from the University of Texas at Austin in 1969.
Publications and Papers
1. ``Advances in Optically Pumped Helium Magnetometers for
Space and Earth Science.'' (Invited paper with E.J. Smith at
IXth IAGA Workshop on Geomagnetic Observatory Instruments,
Slovakia 12-18 June 2000.) Contributions to Geophysics and
Geodesy, 30, No. 2 (2000).
2. ``The Helium Magnetometer: An Instrument Providing
Exceptional Sensitivity, Accuracy and Versatility,'' (with E.J.
Smith and R.J. Marquedant), Chapman Conference--Measurement
Techniques for Space Plasmas, Santa Fe, NM, April 1995.
3. (Invited) ``Advances in Laser-Pumped Helium Magnetometers
for Space Applications,'' 1990, 8th Topical Conference on High
Temperature Plasma Diagnostics. Hyannis, MA, May 1990,
published in Review of Scientific Instruments, October 1990,
2984.
4. ``Nd:LNA Laser Optical Pumping of 4He: Application to
Space Magnetometers.'' Published in Journal of Applied Physics,
December 15, 1988, Page 6615.
5. ``New Near-Infrared Polarizer for Laser Applications,''
(with D. Andrychuk), Proc. of SPIE, 740 (1987).
6. ``Evaporative Thin Metal Films As Polarizers,'' (1983),
SPIE, Vol. 307, Polarizers and Applications, 25.
7. ``Application of Helium Isotope to a NMR Gyro,'' (with
D.D. McGregor), published in Optical Engineering as Proceedings
of Conference on Laser Inertial Rotation Sensor, 1978.
8. ``Evaporated Metal Films as Polarizing Optical Coatings,''
Journal of the Optical Society, 63, 1283 (1973)--Abstract.
Presented at the 1973 Annual Meeting of the Optical Society of
America, Rochester.
9. ``Transverse Relaxation Times for He 3 Nuclei by Free
Precession Method,'' Bulletin of American Physical Society 4,
487 (1974). Presented at the APS Washington, DC meeting.
10. ``A Nuclear Free Precession Magnetometer Using Optically
Polarized He3 Gas,'' IEEE Transactions on Magnetics, Vol. MAG-
10, 528 (1974). Presented at the International Magnetics
Conference, Toronto.
11. ``Measurement of the Geomagnetic Field Using Parametric
Resonances in Optically Pumped He4,'' (with D.D. McGregor),
IEEE Transactions on Magnetics, Vol. MAG-10, 532 (1974).
Presented at the International Magnetics Conference, Toronto.
12. (Invited) ``Measurement of Weak Magnetic Fields Using
Zero-Field Parametric Resonance in Optically Pumped He4,''
(with B.I. Marton). IEEE Transactions on Magnetics, Vol. MAG-9,
221 (1973). Presented at the International Magnetics
Conference, Washington, DC.
13. ``Zero-Field Level Crossing Resonances in Optically Pumped
He4,'' Bulletin in the American Physical Society, 17, 1127
(1972). Presented at the San Francisco meeting of the APS
Division of Electron and Atomic Physics (1972).
14. ``Zero-Field Level-Crossing Resonances in Optically Pumped
He4,'' Physical Review Letters 29, 1642 (1972).
15. ``Self-Oscillating Magnetometer Utilizing Optically Pumped
He4,'' with P.C. Cabiness and S.L. Blevins, Rev. Sci.
Instruments 42, 763 (1971).
16. ``Advanced Optically Pumped Sensors for Detecting Small
Changes in Magnetic Fields,'' Proceedings of the Magnetic
Anomaly Detector Symposium Naval Ordnance Laboratory, White Oak
(1971).
Patents:
``Radiation Source for Helium Magnetometers.'' Issued 1991.
``Light Polarizing Material Method and Apparatus.'' Filed February
1973. Issued 1975.
``Light Polarizer Comprising Ellipsoidal Metal Particles on Surface of
Transparent Sheet and Method of Making the Same.'' Issued June
1992.
Doctoral Dissertation
``Orientation Dependent Resonance and Nonresonance Effects in Optically
Pumped Helium 4,'' University of Texas at Austin, 1969.
Chairman Smith. The appreciation is ours.
Dr. Murphy.
STATEMENT OF DR. OLIVER J. MURPHY, PRESIDENT, LYNNTECH,
INCORPORATED, COLLEGE STATION, TEXAS
Dr. Murphy. Thank you, Mr. Chairman, Congresswoman Johnson.
I thank you for allowing me the opportunity to testify today
before you regarding the Small Business Innovation Research
Program and the related STTR program.
I am the co-founder and President of Lynntech, Inc., a
small business specializing in the development and
commercialization of new technologies. The company is located
in College Station, the home of Texas A&M University. The
company was founded in 1987, and since that time the business
activities of the company have focused on the development and
commercialization of new technologies in a number of key areas
of vital important, both for our security and economic growth
in this country.
Early stage development of technologies in the critical
areas that we are working in have been supported by funds
received from the Federal Government through the SBIR program.
As to the technical feasibility of various technologies have
been established, the company was successful in obtaining
advanced technology development funding through other Federal
Government programs such as Broad Agency Announcements, some
PRDAs and other agency solicitations. Subsequently, in a number
of cases, advanced hardware developments that yielded prototype
devices were created as a result of establishing relationships
with intermediate-sized and large-sized industrial
corporations. These have resulted in successful commercial
products and processes.
The goal of the company from day one, and still is, is to
commercialize products and services derived from successfully
developed new technologies. The company's commercialization
plan includes licensing arrangements, spinoffs, joint ventures
and outright sale of developed technologies where appropriate.
A number of these commercialization mechanisms have been
successfully expedited by the company, and have involved
technologies developed with SBIR funding.
And, in the interest of time, I have described two of them
in my extended testimony, and I will leave it for the record.
Critical to the success of Lynntech in developing and
commercializing new technologies has been its participation in
and support by the SBIR programs of almost all of the Federal
Government departments and agencies. The company has received
Phase I, Phase II, and Phase III awards from departments and
agencies that issue both contracts and those that issue grants.
This has allowed the company to maintain a sustained technology
development effort for a number of critical technologies, for
instance, such as fuel cells, that are recognized to be of
vital importance to the national security and to the country's
economic future.
The existing SBIR and STTR programs are, indeed, novel
models for funding technology development and commercialization
within small businesses. However, they can be improved,
enhanced, and expanded upon, so as to stimulate regional or
local economic development, and even to give a greater return
to the taxpayer.
To further improve the SBIR and STTR programs, I would like
to recommend the following. There should be more extensive
participation of federal agencies in SBIR Phase III activities,
and, indeed, this was referred to earlier by my colleague, Dr.
Slocum.
There should be more extensive coaching and business
support for SBIR/STTR funded small businesses so as to increase
the level of commercialization activities.
There should be greater participation by state agencies in
providing resources to SBIR/STTR funded small businesses that
are complimentary to the existing federal SBIR/STTR programs.
There should be expanded regional conferences and workshops
that provide information about these programs and sources of
assistance for existing, as well as start-up small businesses.
It should be required, in my opinion, that business schools
of federally-funded colleges and universities should interact
with SBIR and STTR funded small businesses.
And finally, courses on new ventures and entrepreneurship
should be established at all colleges and universities in this
country.
Mr. Chairman, I thank you for your time.
[The prepared statement of Dr. Murphy follows:]
Prepared Statement of Oliver J. Murphy
INTRODUCTION
Mr. Chairman, Congresswoman Johnson, Members of the Committee, I
thank you for allowing me the opportunity to testify before you
regarding the Small Business Innovation Research (SBIR) Program, the
related Small Business Technology Transfer (STTR) Program, and the
opportunities that these programs offer to small businesses in the
United States, and in particular in the State of Texas.
My name is Oliver J. Murphy, co-founder and President of Lynntech,
Inc., a small business specializing in the development and
commercialization of new technologies. Lynntech is located in College
Station, the home of Texas A&M University. I have actively participated
in research and development work, as well as technology development and
commercialization efforts, for over twenty years, first in academia,
second in a large corporation, and finally in a small business. Having
experienced all three working environments, I am convinced that
employee satisfaction, growth, creativity, and productivity are
greatest in small businesses. Small businesses are good for the United
States because they create a growing number of jobs each year in this
country and develop an increasing amount of new technologies as
evidenced by the number of U.S. patents attributed to this business
sector. In order to maintain economic growth and to enhance our
standard of living in this country through the decades to come, as a
society we must devote the necessary resources to foster the growth of
existing small high technology businesses and to create new small
businesses at a faster pace. A significant amount of these resources
can be made available to those small businesses through the SBIR and
STTR programs. Improved and enhanced variants of these programs are
essential for the creation and growth of a major segment of small high
technology based businesses in this country.
Since, to a large extent, venture capitalists no longer make seed
round investments in start-up technology based ventures, increasingly
small businesses face the challenge of securing the needed capital to
demonstrate the technical and commercial feasibility of their concepts
or ideas. Over the last decade venture capitalists have made only later
stage investments in small technology based companies after the
technical and commercial risks have been minimized or almost
eliminated. In many cases this has led the principals of new, start-up
technology development ventures to raise seed capital from family and
friends, which in most cases is insufficient to reach desired
milestones and leads to the failure of many such ventures. The unique
and essential aspect of the SBIR and STTR programs is that they provide
to for-profit small businesses the difficult to obtain early stage
financial support necessary to develop high-risk, high-payoff
technologies. Solicitations for proposals, issued at least annually, by
participating Federal Government Departments and Agencies encompass the
complete spectrum of technologies from aerospace to biotechnology and
nanotechnology. This eliminates any technology bias or so-called
``picking winners'' by the Federal Government.
With the continued downsizing of most large industrial corporations
and increasing pressure on management teams to meet or exceed the next
quarterly earnings expectations, long range research and technology
development efforts within many of these corporations have been reduced
significantly over the past ten to fifteen years. To maintain a
technological and competitive edge to their products in what is rapidly
becoming a global economy, large companies need to have access to the
latest developed technologies. It has been recognized more and more
each year that a ready source of proven high technologies for these
large companies exists within many SBIR and STTR funded small
businesses throughout the country. Through either acquisitions,
strategic relationships, or licensing arrangements, commercialization
of many of these developed technologies is accomplished by large
corporations.
Alternatively, commercialization is achieved by the small
businesses themselves by raising additional capital in the public
markets and/or as the result of venture capital investments, such
investments and raising of capital being made after the initial SBIR
funding has been spent. Because of the growing trend of a short-term
business focus and the increasing tendency to avoid technology risk
within large industrial organizations in this country, the need for
small, high technology businesses and their ability to obtain
technology development funding from State and Federal Government
entities, such as that made available through the SBIR and STTR
programs at present, will be essential for the generation of jobs in
the future and the creation of wealth and prosperity in this State and
the other States.
The existing SBIR and STTR programs are models for funding
technology development and commercialization within small businesses
that can be improved, enhanced, and expanded upon so as to stimulate
regional or local economic development and give greater returns to the
taxpayer. To illustrate the opportunities offered by the SBIR and STTR
programs, I will outline below the experiences of Lynntech with these
programs.
LYNNTECH'S EXPERIENCE WITH THE SBIR AND STTR PROGRAMS
Lynntech was founded as a small, high technology business in 1987
and incorporated as a Texas Corporation. At the time of organizing the
company, the founders were employees of Texas A&M University. However,
the company did not initiate full time business activities until
January of 1990, after its two initial employees resigned their
positions at Texas A&M in December 1989. Since that time the business
activities of the company have focused on the development and
commercialization of new technologies in four primary areas: (i)
environmental technologies; (ii) electrochemical energy conversion and
storage; (iii) corrosion and materials science; and, (iv) biomedical/
bioengineering. Early stage development of technologies in these key
areas has been supported by funds received from the Federal Government
through the Small Business Innovation Research (SBIR) Program. After
the technical feasibility of various technologies have been
established, the company has been successful in obtaining advanced
technology development funding through other Federal Government
programs such as, Broad Agency Announcements (BAAs), Program Research
and Development Announcements (PRDAs), and other Agency solicitations.
Subsequently, in a number of cases, advanced hardware developments that
yielded prototype devices were created as a result of establishing
relationships with intermediate-size and large-size industrial
corporations. These have resulted in successful commercial products and
processes. The goal of the company from the day it was founded is to
commercialize products and services derived from successfully developed
new technologies. The company's commercialization plan includes
licensing arrangements, spinoffs, joint ventures, and outright sale of
developed technologies where appropriate. A number of these
commercialization mechanisms have been successfully exploited by
Lynntech and involved technologies developed with SBIR funding.
Critical to the success of Lynntech in developing and
commercializing new technologies has been its participation in and
support by the SBIR programs of almost all of the Federal Government
Departments and Agencies. The company has received SBIR Phase I, Phase
II, and Phase III awards from Departments and Agencies that issue
contracts, and from those that award grants. This has allowed the
company to maintain a sustained technology development effort for a
number of technologies, such as fuel cells, that are recognized to be
of vital importance to national security and to the country's economic
future. Fuel cell power sources have multiple applications for which
large markets are a few years to over a decade away. After learning how
to work with the various Government Departments and Agencies over the
first few years of being in business, the SBIR experience from proposal
submission, contract negotiation, contract or grant administration, and
reporting have been very good. A marked improvement has occurred over
the years with regard to receiving payments from various Agencies under
the SBIR program, in particular, for contracts having progress
payments.
A measure of success in developing new technologies within Lynntech
under the SBIR program is to record the number of issued U.S. patents
assigned to the company. To date Lynntech has received 80 U.S. patents
and in some cases corresponding foreign patents. Securing the
intellectual property rights for developed technologies is essential to
achieve subsequent successful commercialization of those technologies.
Another measure of success that is monitored is the total number of
employees in the company at the end of each year. From two employees at
the beginning of 1990, new hires have been added each year that the
company has been in business giving a total of 149 employees at the end
of 2003. Of these 109 were full time employees and 40 were part time as
well as being undergraduate students at Texas A&M University. As a
result of the SBIR and STTR programs, Lynntech is the leading high
technology development and commercialization company in the Bryan/
College Station region. The economic impact of the company in the
region, which has surprisingly few similar high technology small
businesses in view of the presence of Texas A&M University, is quite
significant. To further illustrate the opportunities offered and the
benefits received by participating in the SBIR and STTR programs, I
will provide two examples of technologies developed and successfully
commercialized at Lynntech under the SBIR program.
FUEL CELL TEST SYSTEMS
Fuel cells generate electricity through a chemical reaction between
oxygen in the air and a fuel, such as hydrogen or methanol. As a
result, they are quite efficient and clean; discharging only benign
byproducts such as water vapor. These devices have the potential to
power everything from laptop computers to manufacturing plants. Thus,
for over the past 15 years extensive development of various fuel cell
technologies for a variety of applications has been carried out by
universities, national laboratories, and large as well as small
companies both here in the United States and abroad. Developers of the
various fuel cell technologies require advanced, fully automated,
computer-controlled test equipment to determine the performance of fuel
cell components such as electrocatalysts, as well as fuel cell stacks
and fuel cell power systems.
State-of-the-art fuel cell test equipment was invented by Lynntech
in the early to mid-1990s with funding for the design, fabrication, and
testing stemming from a Phase II SBIR contract with NASA's Glenn
Research Center. To match the requirements of individual fuel cell
developers, Lynntech developed a modular approach on designing the test
equipment (see Attachment I), enabling custom solutions with standard
equipment. Since 2001, Lynntech Industries, Ltd., a spin off from
Lynntech, Inc., has been manufacturing and selling a complete range of
fuel cell test systems world-wide to meet the needs of customers in the
rapidly growing market of fuel cells. Commercial sales of fuel cell
test equipment were almost $2 million in 2003. Part of an experienced
management team was put in place in Lynntech Industries in 2003 which
is now actively pursuing venture capital to aggressively exploit this
very significant business opportunity. This ``success story'' was
written up in the NASA Spinoff 2003 Booklet (see Attachment II).
ELECTROCHEMICAL OZONE GENERATION TECHNOLOGY
Ozone has a long history associated with the treatment of drinking
water at municipal water treatment plants. More recently, it has been
used as the final treatment step in the preparation of potable bottled
water. Ozone is known to be a potent disinfectant and is very effective
for destroying a broad range of harmful microbiological species that
may be present in water, food ingredients, and on surfaces such as
flexible medical endoscopes. Ozone generation devices that have been
used for decades include ultraviolet lamps and corona discharge
generators, both of which require a source of oxygen gas to produce
ozone. However, these methods of ozone generation suffer from a number
of drawbacks including performance, reliability, durability,
scalability, and cost.
In the early to mid-1990s with SBIR funding from NASA, Department
of Health and Human Services, and the Department of Defense, Lynntech
developed a new electrochemical method for the production of ozone from
water and investigated the suitability of using it in a variety of
applications. The electrochemical method provided many distinct
advantages which are not available from the earlier mentioned ozone
generation technologies. After securing the intellectual property
associated with the electrochemical ozone generation technology,
Lynntech initiated commercialization activities in the late 1990s. This
resulted in the establishment of a strategic relationship between
WaterPik Technologies, Inc., and Lynntech in 1999. A joint product
development effort was undertaken by both companies to enable the use
of the technology in consumer home products. This lead to the
completion of an exclusive license agreement between the companies in
early 2000 and the successful launch of the first consumer product
namely the AquiaTM for residue-free sanitization in the home in late
2001. WaterPik's AquiaTM product is shown and described in Attachment
III.
The AquiaTM sanitizing system is a revolutionary household
appliance introduced by WaterPik Technologies, Inc., that creates an
all-natural, non-toxic sanitizing solution that is safe to use on food
and surfaces to kill harmful germs. AquiaTM has been proven effective
for use as a food contact surface sanitizes, non-food contact surface
sanitizes and as an anti-bacterial rinse for fruits and vegetables.
AquiaTM also significantly reduces the risk of bacterial cross-
contamination during food preparation involving raw meats and poultry.
AquiaTM, which represents a new category in household products, creates
activated oxygen, also referred to as ozone, by converting ordinary tap
water into ``ozone-infused'' water through a patented electrochemical
process. For years, ozone has been used commercially with the
processing of produce and meats and in water purification but the
necessary equipment was not economical for household use until AquiaTM
was developed. The ozone-infused water produced by AquiaTM is more
powerful than chlorine and can effectively kill 99.9 percent of common
bacteria including E. coli, Salmonella, Staph, Listeria and K.
Pneumonia.
CONCLUSIONS AND RECOMMENDATIONS
In addition to the two technologies described above, Lynntech is in
the process of commercializing a number of other technologies developed
with SBIR funding. SBIR funding has been vital and essential to the
growth and success of Lynntech over the past decade. Technologies in
the embryonic stage of development at present will fuel future growth
on being successfully commercialized either through spinoffs, joint
ventures, or licensing arrangements. Most of Lynntech's SBIR funded
projects have been successful from a technical perspective and it is
anticipated that many of them will also be successful economically.
Over the past ten years, Lynntech has worked with numerous
technical and administrative personnel from various Federal Government
Departments and Agencies. With very few exceptions, I would rate the
level of technical and administrative support that Lynntech received,
on numerous SBIR awards, as very good. In particular, the degree of
interaction and contributions made by Contracting Officers Technical
Representatives from the mission directed Agencies (e.g., DOD Agencies
and NASA) were very good and extremely beneficial. I have not
encountered any conflicts between the research goals of federal
agencies that made SBIR awards to Lynntech and the business plan of the
company. However, it must be pointed out that specific pieces of
hardware delivered to a government agency for their use may not be
relevant as a commercial product. It is the underlying technology,
processes, and know-how accumulated during the SBIR project that can be
used for the creation of useful commercial products.
To further improve the SBIR and STTR programs, it is recommended
that:
There should be more extensive participation of
federal agencies in SBIR Phase III activities;
There should be more extensive coaching and business
support for SBIR/STTR funded small businesses so as to increase
the level of commercialization activities;
There should be greater participation by State
agencies in providing resources to SBIR/STTR funded small
businesses that are complimentary to the existing federal SBIR/
STTR programs;
There should be expanded regional conferences and
workshops that provide information about the SBIR/STTR programs
and sources of assistance for existing and start-up small
businesses that are either participating or would like to
participate in the SBIR and STTR programs;
It should be required that business schools of
federally-funded colleges and universities should interact with
SBIR and STTR funded small business; and
Courses on new ventures and entrepreneurship should
be established at colleges and universities.
Biography for Oliver J. Murphy
WORK EXPERIENCE:
1990-present--President and co-founder, Lynntech, Inc.
1987-1990--Assistant Director, Center for Electrochemical Systems &
Hydrogen Research, Texas A&M University
1984-1987--Project Leader, The Standard Oil Company, Warrensville
Research Center, Cleveland, Ohio
1980-1984--Research Associate/Senior Scientist, Department of
Chemistry, Texas A&M University
EDUCATION:
1980--Ph.D. (Electrochemistry): University College Cork/National
University of Ireland, Ireland
1977--M.Sc. (Electrochemistry): University College Cork/National
University of Ireland, Ireland
1976--H.Dip.Ed.: University College Cork/National University of
Ireland, Ireland
1975--B.Sc. (Chemistry): University College Cork/National University of
Ireland, Ireland
PROFESSIONAL SOCIETY MEMBERSHIPS:
Electrochemical Society
International Society of Electrochemistry
American Electroplaters and Surface Finishers Society
International Association for Hydrogen Energy
PUBLICATIONS:
Books and Book Chapters:
1. ``Electrochemistry in Transition: From the 20th to the 21st
Century,'' (with S. Srinivasan and B.E. Conway), Plenum Press,
New York (1992).
2. ``The Electrochemical Splitting of Water.'' In: ``Modern
Aspects of Electrochemistry,'' eds., J. O'M. Bockris, R.E.
White and B.E. Conway, Plenum Press, New York (1983), Vol. 15,
Ch. 1.
3. ``Spectroscopic Characterization of the Passive Film on
Iron Before and After Exposure to Chloride Ion.'' In:
``Electrochemistry in Transition: From the 20th to the 21st
Century,'' eds., O.J. Murphy, B.E. Conway and S. Srinivasan,
Plenum Press, New York (1992).
Refereed Journal Articles:
Over 50 refereed journal articles in national and international
journals and over 60 technical presentations at national and
international technical conferences. In addition, invited speaker at
numerous regional and national Small Business Innovation Research
(SBIR) Conferences.
PATENTS:
Over 50 issued U.S. patents and corresponding foreign patents.
Discussion
Chairman Smith. Thank you all very much.
There's a lot of business people out here, so I'm going to
start with a little sort of sermon, preaching, science and math
test scores internationally are the seed corn for our
researchers in this country. In the United States in K-12 we
rank near the bottom in our science and math scores. And, it
just seems to me that as a pocketbook interest on the part of
business, certainly on the part of government, we've got to do
a better job in encouraging our kids to be interested and
stimulated in science and math, and to be involved in it as
they go through their further education.
I want to start, I think, with a question maybe to all
witnesses. What percent of resulting products go to or are sold
to the Federal Government or state government, versus the
private sector? Do we have any figures on that, Mr. Montes,
from SBA, or does Victor Klingelhofer?
Mr. Montes. I think Victor Klingelhofer in Washington, they
monitor compliance and statistics such as that in Washington.
Would you like that now?
Chairman Smith. Yes, either way, whatever Jim is the best
way to do it. If they've got a response, if they haven't,
David, follow up on that.
In the meantime, Ms. Goodnight, what percentage of your
research effort goes to public versus private sector?
Ms. Goodnight. For us, because we are a granting agency
predominantly, I would say a great majority would go to the
public sector. We actually did a study that is posted on our
web site, a national survey to evaluate the SBIR program
between 1992 and 2001. From those results it appears that the
majority are going to the private sector, because at the end of
the day we don't.
Chairman Smith. Private sector, not public sector.
Ms. Goodnight. I'm sorry, public sector, because we do not
buy what it is they are developing at the end of the project.
Chairman Smith. I would think if it helped, I would think
eventually it's going to hospitals and health care providers.
Ms. Goodnight. Right, and physicians, and some of the
major----
Chairman Smith. Which I call the private sector.
Ms. Goodnight. ----and some of it may come back to the
research institutions, if they are developing improved research
tools.
But, my point is that our agency is not buying back what's
being developed.
Chairman Smith. Yes, right.
Dr. Slocum, Dr. Murphy, in your involvement what percentage
is sold to government?
Chairman Smith. Yes, Polatomic is 100 percent DOD and NASA
right now. We did a spinoff of our nanotech business into
integrated photonics and joined with five people from Bell
Laboratories formed a new company, and that's aimed at the
private sector.
Chairman Smith. And, Dr. Murphy.
Dr. Murphy. Yes, the same in our case, Mr. Chairman, most
of our products and services are to the private sector, a
spinoff company sells products worldwide. We export to Europe
and Asia, and we have a number of licenses.
Chairman Smith. Dr. Slocum said the public sector, most of
yours goes back to the Department of Defense, Navy.
Dr. Slocum. Yes, but we did a spinoff to a separate company
that markets worldwide.
Chairman Smith. All I'm really interested in is the end
product, does the end product go into commercial market use or
does it go back to the Federal Government?
Dr. Slocum. Well, we are 100 percent in Polatomic going
into the government sector. In the other company we are going
virtually 100 percent into the private sector, into the
commercial area.
Chairman Smith. And, what is that product?
Dr. Slocum. It's optimal filters and biohazard potential.
Chairman Smith. Dr. Murphy.
Dr. Murphy. We are 100 percent at the moment into the
private sector.
Chairman Smith. And, let's see, Mr. Klingelhofer of SBA, do
we have a figure nationally?
Mr. Klingelhofer. We do not currently----
Chairman Smith. I think we are going to ask you to send us
that answer, because our technology sees you very clearly, but
the transmission is a little bit weak.
Mr. Klingelhofer. Is this better, Mr. Chairman?
Chairman Smith. Yes, that's good.
Mr. Klingelhofer. We do not currently track those numbers
at the SBA. We will, however, research it.
Chairman Smith. And so, what do you consider the goals of
the program? As these different agencies develop their
parameters of what they are looking for, how do they know what
to decide if it's research, basic and applied, that's
eventually going into the marketplace I guess I'm just a little
curious of the tendency of the different agencies to say, well,
this is what our agency needs, this is how we are going to send
out the request for projects coming in.
Mr. Klingelhofer. Mr. Chairman, we have developed a new
database which will go on-line.
Chairman Smith. You have to talk in the mic somebody said.
That didn't work quite well.
I'm going to bypass that and ask you, Ms. Goodnight, in NIH
what is the number of requests versus the dollar allocations?
Do we have a lot more requests for projects than the dollars
that you make available?
Ms. Goodnight. We do, indeed. Actually, about 24 percent of
our Phase I SBIR applicants are funded, and about 44 percent of
our Phase II applicants are funded.
Chairman Smith. And, how does that gel with the requirement
that you set aside a certain amount of your total research
dollars for this program?
Ms. Goodnight. The way it gels is, we are receiving,
especially now, we have a large increase in the numbers of
applications to our agency and other agencies are seeing the
same, that is, in fact, why we chose this year to exceed the
minimum requirement, because we had many more projects than we
had funds to support if we were only to go with the minimum 2.5
percent. And, for us that's a floor, and we have the option to
exceed that minimum requirement, and we do exceed it, because
we want to fund the best science.
Chairman Smith. Representative Johnson, you remember the
hearing, we had one hearing where one of the witnesses said
that in the private sector, because so much pressure was coming
from their Board of Directors and investors, they really didn't
get involved in applied research unless it looked like they
could have results in five or six years, and so it seems to me
that that means that there needs to be some action on the part
of State and Federal Government to try to be encouraging,
whether it's through the tax system, or whether it's more
effort in these kind of programs.
I spoke last week or week before last to the Industry
University Collaborative Research Program effort, which helps a
little bit with the application of some of our knowledge. And,
I'm going to turn this over to you, Congresswoman Johnson,
before I get into too much of my speech making mode, but
somehow we've got to be a little more selfish with our research
dollars in this country to try to make sure results as an
advantage to workers and businesses in the United States, and
that's part of what I hope to get from this hearing, how do we
do it?
Ms. Johnson. Thank you.
Chairman Smith. And, which Dr. was it, who has to leave at
11:15? Dr. Feng, and Dr. Slocum and I, have to leave at 11:15.
Ms. Johnson. Okay.
Dr. Feng, it's obvious from your testimony that a vibrant
high-technology small business community could bring
substantial research contracts to the University of Texas at
Dallas. Does your institution function as a subcontractor on
any SBIR grant?
Dr. Feng. Currently, I think we have about four of them as
subcontractors to SBIR grants. What I would like to actually
emphasize and underscore to the small businesses here, is not
to just look at the University of Texas at Dallas as a single
entity, but rather consider us as a window to other research
universities in the State of Texas, or, in fact, in the
Southwest, because we have such good working relationships with
all the universities, such as Rice, UT-Austin, Texas A&M, and
so on and so forth, including our neighbor UT-Arlington.
So, I would say that there is a tremendous effort that is
going on, however, I think that it is still too early to tell
whether it's successful or not.
What I would like to see that, in a year or two we are
talking about each university working with ten to 20 small
businesses in developing these kind of projects.
Ms. Johnson. What services does your university supply, or
the Consortium of Universities, supply to the companies who
wish to get involved in this program?
Dr. Feng. Well, I suspect that we'll look at the kind of
activities that's going to come out of SBIRs and STTR. It will
be, a lot of them will be in the biotechnology area, because of
the tremendous growth of the NIH funding areas. I think the
whole idea of homeland security technologies is going to grow
significantly, we hope, of course, from the university side to
see a clear path within the homeland security activities, how
that can actually benefit the region, as well as for the
Nation.
I think the other area that is going to have a lot of
progress is the information technology security issues, the IT
security issues, where most universities, we, of course, have a
lot, but most universities have an enormous amount of strength.
Finally, nanotechnology for this region is becoming one of
the hotbeds of the United States. Nanotechnology's
collaboration between the four universities, Rice, Austin,
Dallas and Arlington, together with our two border
universities, UT-Brownsville and UT-Pan Am, have really started
very, very well, and we look forward to all the participation,
not only in the dry side of the nanotechnology, but also on the
wet side of nanotechnology, which means that things such as
nano medicine and so on with NIH, I have heard recently, that
is promoting very, very actively.
Ms. Johnson. And, how does a small business in Dallas, for
example, get in touch or receive an SBIR award and learn how to
apply? Is there a mentoring program?
Dr. Feng. Well, actually, there is a very good website that
people can go to called SBIRworld.com, and you go in there and
you find just about all the SBIR information that you need.
We are trying to set up monthly training sessions, not just
for the small business, but also for our faculty. Our faculty
really don't quite understand the importance of SBIR. I tell
the faculty quite often that small business does not mean small
money, and that is an important issue, and small business has
real technological agility which is very useful for the
university faculties to understand how to bring their research
into the commercial side.
I often said that I think we miss something when we just
talk about R&D, research and development. We should have the
second D, which is deployment. Deployment is very bad from the
university point of view, we need to work with industry to help
us to really bridge that gap.
Ms. Johnson. And, a final question, in the past we
recognized that people like Bill Gates and Michael Dean dropped
out of college in order to have full control of their
intellectual property. If a company is working in the field and
comes to the university for help, who controls any resulting
intellectual property?
Dr. Feng. In the SBIR case, as far as I understand it, it
is rather complicated, this is a complicated issue, we probably
can talk about it all afternoon, but I think the Federal
Government, of course, insists that the intellectual property
in this particular case lie in the small business, and, in
fact, it would go very quickly for commercialization.
Universities tend to be a little bit more defensive on
that, but I think it's getting more and more flexible nowadays
in this particular effort.
Ms. Johnson. Thank you very much.
Did you want to ask?
Chairman Smith. Either way.
Dr. Slocum, I think Ms. Goodnight had a reaction maybe to
your question?
Ms. Goodnight. Just two quick reactions. One is, because
I've got data with me and I'll give you some real numbers to
your question. We, actually, this year received 4300
applications, and that was about a 33 percent increase over the
past year. So, based on the amount of awards, percentage of
awards that were made, we clearly are seeing more.
With regard to intellectual.
Chairman Smith. I'm sorry, what percentage of that, of the
applications, were awarded grants?
Ms. Goodnight. Right, so 24 percent of the Phase I SBIRs
were awarded, and 44 percent of the Phase II SBIR applicants
were awarded.
Chairman Smith. Dr. Slocum indicated in his testimony that
there's a problem with a small business that has so many
researchers of keeping them in line while they wait for the
bureaucracy and the bureaucrats to come up with the Phase II,
or even worse I think you indicated, going from a Phase II to a
Phase III, and you agree, Dr. Murphy, that's one of the
problems?
Dr. Murphy. Yes.
Chairman Smith. Is there any way, Mr. Montes, or the Deputy
Administrator in Washington, should we be looking at that
problem? If we are saying to a small company we want to help
small companies in this effort, but we are going to make it
very--you know, it ends up being very inconvenient because of
the bureaucratic time line between I and II, and II and III.
Dr. Montes.
Mr. Montes. Thank you for the promotion, I'm Mr. Montes,
Let me defer that to Victor Klingelhofer, if the microphone
is working there, Victor.
Mr. Klingelhofer. Is it working now, Mr. Chairman?
Chairman Smith. Yes.
Mr. Klingelhofer. We are undertaking a number of steps to
increase the possibility of awards to small businesses. One
thing that we are doing is working right now on enhance the
program in Fiscal Years '04 and '05. We are currently talking
with HUD, the Department of Veterans Affairs, GSA, and Justice
so as to increase the band of small business opportunities in
with the Federal Government market.
Chairman Smith. There were a couple. Yes, Mr. Montes.
Mr. Montes. Mr. Chairman, Ms. Goodnight wanted to address
that point as well, but before I turn the microphone over to
her, if I can go back to your question regarding the
commercialization of whether the end result goes to public
entities or private entities, or the commercial private
enterprise.
The statutory purpose, and this comes from our policy
directive, the statutory purpose of the SBIR program is to
strengthen the role of innovative small business concerns in
federally-funded research or research and development. Specific
program purposes are to, [1] stimulate technological
innovation; [2] use small business to meet federal research and
development needs; [3] foster and encourage participation by
socially and economically disadvantaged small business
concerns, and by small business concerns that are 51 percent
owned and controlled by women in technological innovation; and
[4] increase private sector commercialization, again, private
sector commercialization derived from federal research and
development.
Chairman Smith. They make their own research and
development.
Mr. Montes. Exactly, well, not necessarily, not in the case
of the Sonic Toothbrush, for example. So, there are the two
references there.
Chairman Smith. That doesn't mean one way or the other.
Mr. Montes. Right.
Ms. Goodnight. I would just like to comment on what our
agency is doing to address this really difficult issue that the
entrepreneurs are facing, and that's the gap that typically
occurs between Phase I and Phase II, as well as between Phase
II and Phase III, if you don't have an agency that's going to
be that Phase III customer.
Our agency offers a Phase I/Phase II fast track option,
where the applicant can propose to us both Phase I and Phase II
simultaneously and get a concurrent review.
There are other agencies who offer similar types of gap
funding options, like a Phase IIB. DOD has a fast track, and
there might be some other agencies with programs to address the
gap.
We also offer no cost extensions and supplemental awards,
the most recent of which is a competing continuation Phase II
for the types of research that will need to go through
regulatory processes, specifically, the Food and Drug
Administration.
So, I think our agency is certainly looking at ways that we
can address many of these funding gap issues.
Chairman Smith. Dr. Feng, would you want to make one final
30 seconds, because you have to go in 30 seconds.
Dr. Feng. Thank you very much.
I think that I would encourage the small businesses to
contact me, and to see how we can work together in the future.
Chairman Smith. Well, just as a follow up on that, one or
two individuals here today have developed a business consulting
effort, where they are charging businesses to get involved in
this program. And, it seems to me the Small Business
Administration, each one of the agencies, and let's make sure
maybe we pass that on to SBA, indeed, and we can follow up on
it, it seems to me that the universities should make an extra
effort so that businesses don't have to go pay for somebody who
could have government help.
And so, the complication of the application process that
was in your testimony, both of your testimonies a little bit, I
have to question, and you are certainly excused whenever you
feel comfortable, Dr. Feng, at what point should we guard
against, or at what point does this become a substitute for an
effort of a small business to go out and get investors or use
their own funds for research that they'd do anyway. And, I'm
going to ask you, Dr. Slocum, to comment on that, and then the
Small Business Administration and Dr. Murphy.
Dr. Slocum. At Polatomic, we regard the SBIRs as investors.
Chairman Smith. Yes, and does it become a substitute for
other private sector money?
Dr. Slocum. Well, it turns out when you are doing DOD work
or NASA work it moves so slow, and you are working on national
priority issues, that you need a patient investor like SBIR.
In the second company that we spun off of Polatomics, when
we combined the five people from Bell Laboratories we've been
able to raise $7.5 million of venture capital, because that was
aimed at a quick turnaround commercial application. It had to
be telecom, so it was not the smartest thing I've ever done,
but that opens up opportunities on both sides.
Chairman Smith. And, Dr. Murphy.
Dr. Murphy. I'd like to answer it this way, Mr. Chairman.
Most SBIR companies that receive SBIR funding are trying to
prove, assure feasibility, demonstrate feasibility. It's very
early stage research and development work, which venture
capitalists today will not fund.
There is this lack of ability on the small businesses to be
able to access funding from any source until you have shown
feasibility, a working model, maybe intellectual properties, et
cetera. I don't see it as an alternative to venture capital
funding, it's an essential ingredient leading to venture
capital funding. And, I think that is critical in this country,
we lack that. This SBIR and STTR program is unique, it's very,
very, very unique, and will serve us, I think it's serving this
country well at the moment, but in the decades to come its
full, if you like, its full benefits will be reaped, because
large companies, as we well know over the last few decades, are
no longer doing this advanced research and development work. We
will lack the ability to have new products, new technologies,
unless somebody takes up the plow, if you like, to put money
into that effort.
Chairman Smith. I guess as a public policy I personally
would like to go spread this money around and encourage more
small businesses, should we consider putting some kind of a
limit so that one business that now has learned how to get
through the bureaucratic ropes of government doesn't
monopolize, for lack of a better word, some of the repeat
funding? Should we consider some kind of a limit of three Phase
I grants, or ten Phase I grants? I mean, that's my question,
should we make an extra effort to spread this around, and I'll
ask SBA in Washington eventually to maybe get back to me on
that question.
Yes, Dr. Slocum.
Dr. Slocum. I think that, you know, as a free enterprise
person, that as long as you have a meritorious idea that really
has promise that it would be unwise for the country to limit
it.
I sometimes judge Phase II proposals for the National
Science Foundation, and they've got a pretty good filter for
catching people that are just riding the system to try to get
grants if they are not really interested in getting a Phase
III, they are just interested in paying good salaries to a
group of researchers. So, they can kind of catch them through
their computer scan.
Chairman Smith. Will Polatomic consider giving part of your
net profits that result from this government tap to your
research back into a revolving program to fund the program?
Maybe, I don't know what percent, maybe one percent, maybe two
percent?
Dr. Slocum. Well, I think the thing I would respond to,
knowing how much difficulty we're having just getting the
funding to stay in Phase III, but I think what would be
reasonable is to tithe some time back into the community system
to mentor, along with groups like UTD and SBA, to mentor
people. We do that informally, because people come to us for
help.
Chairman Smith. I've got to turn this back over to
Congresswoman Johnson.
Ms. Johnson. Thank you.
Let me just ask one more question on what you were saying
to clarify. You mean there should be some type of consortium
developed so that the small business people will know that
that's a way to access the information?
Dr. Slocum. Yes, and I have people that drop out of large
companies like TI and when they start on their SBIR and come to
me I'm amazed at how little they know about just getting
through the process. And so, people that are coming from less
sophisticated areas will have a tough time. So, a little bit of
help from somebody that's an experienced and successful bidder
on SBIR can be a great help, and it doesn't take a lot of time.
You can do a lot at just a lunch sometimes.
Ms. Johnson. Thank you very much.
I was going to ask Mr. Montes of SBA, it's my understanding
that about 15 percent of SBIR grants go to minorities and other
under-represented small businesses. Are grants to women owned
businesses included in this number?
Mr. Montes. I believe so, yes, they are. I do have those
numbers, but rather than shuffle through a bunch of papers for
you here I'll look for them if you want to continue on, I'll
get those for you.
Mr. Klingelhofer. Congresswoman Johnson, women-owned
business numbers are approximately seven percent, seven percent
minorities.
Ms. Johnson. seven percent of the 15 percent?
Mr. Klingelhofer. No.
Chairman Smith. So, that's two groups, 15 for minority and
seven for women, is that correct?
Ms. Johnson. So, they are calculated differently?
Mr. Montes. Yes.
Ms. Johnson. Historical Black colleges and universities and
other minority serving institutions have a long history in
science and technology. In the aggregate, they graduate many of
the best and brightest minority scientists and engineers. As a
matter of fact, the number one high school in the Nation is in
the ghetto here in my district for science and engineering,
math, and calculus.
Are the STTR awards being made that involve these
institutions, and if not, or if they are, what is the SBA doing
to advertise the existence?
Mr. Montes. Yes, ma'am, principally through the FAST
program the SBA has been the lead agency for the past five
years in an initiative to provide outreach and technical
assistance to HBCUs, small disadvantaged minority and women-
owned businesses. Through a partnership between the EPA, DARPA
and the SBA, representatives at various HBCUs were engaged by
the co-sponsoring federal program managers to train them in the
program administration and technical components of the SBIR and
STTR programs.
This has enabled the HBCUs to become mentors within their
given states or regions, and assist in increasing the
participation level of these under-represented groups.
Ms. Johnson. Thank you.
Sometime soon, I think maybe April, the National Science
Foundation is having sort of a regional workshop for the
minority-serving institutions here on campus. Would you
consider having a similar type organized workshop for small
business at minority-serving institutions, who are maybe within
100 miles driving distance to a location.
Mr. Montes. Yes, ma'am, absolutely.
Ms. Johnson. Okay. I'd like to work with you in putting
something like that together.
Mr. Montes. Great.
Ms. Johnson. It really can be very daunting for small
businesses to deal with government. What advice do you have for
a small high-technology business in the Dallas area that wishes
to explore the SBIR opportunities, and how does one begin to
know what agency to apply to?
Mr. Montes. Well, certainly, they could start with our
district office here in the Dallas-Fort Worth area. We are
technically located in Fort Worth over by DFW Airport.
Certainly the university system is a good place to start as
well, but also I think that these solicitations, and, perhaps,
Ms. Goodnight can tell us how the solicitations are issued, I
presume that they are placed on the Internet and can be
discovered.
Ms. Goodnight. I think we have to be mindful to keep saying
go to the internet. I mean, I'm a real people person. So, what
I would offer is, although the SBIRworld.com is certainly a
one-stop place to search all ten agencies, now 11 agencies,
solicitations, this needs to be a program about people for it
to really work effectively.
So, I would encourage those potential applicants to come to
the national conferences so they'll find the registration and
all the administrivia about that on the SBIRworld.com. But come
to the national conferences, one is coming up in April in
Atlanta, Georgia, and meet with the program managers, to get a
better sense of that agency's mission and culture, et cetera.
And then, they've got a face with a name to go back to and
really feel like after they've gone home from those conferences
that they can pick up the phone and call my number and I will,
you know, answer it. There's no secretary answering my phone.
There's a pretty standard process, even though there are a
lot of agencies, and we present the similarities about that
process in our general overview at these conferences, and then
we go into breakout sessions to go into the nuances. So, it's
really a valuable two or three days worth of their time.
NIH is actually having their annual conference, their sixth
one, it's free.
Chairman Smith. Would the lady yield?
Ms. Johnson. Will you yield?
Chairman Smith. No, you have to yield.
Ms. Johnson. Oh, I'm sorry, yes.
Chairman Smith. You mentioned 21 regional areas that NIH
has, does this end up giving an advantage to those businesses
in those 21 areas?
Ms. Goodnight. There are 23 awarding components, the
Institutes and Centers, each one of those has an SBIR
allocation.
Chairman Smith. Does this give an advantage to the
businesses in those 23 regional areas, or does the outlying
areas of those regions have as much advantage? How many miles
or what are we talking about to come to a national meeting?
Ms. Goodnight. To come to a national meeting? We hold those
meetings around the country, so I don't know that I fully
understand your question, but they are not always held in the
same state.
One of those nationals is always held in a rural state. So,
sometimes it may only be 50 miles, or ten miles, other times
it's going to involve, you know, a plane trip to get to that
national.
Chairman Smith. Okay.
Ms. Johnson. Thank you.
You know, in Texas you can travel a thousand miles.
Ms. Goodnight. I've done that recently, just in the past
two weeks.
Ms. Johnson. And so, there are locations here that are
closer to other states than for the rest of the state. So, in a
state like this, we would have to have more than one consortium
meeting to reach a number of the locations where the small
business is concentrated, because we have a large number of
small businesses in the state, and I would say probably at
least 25 percent of those probably could benefit from some of
the nurturing of SBIR.
Mr. Klingelhofer. Congresswoman Johnson, I just wanted to
point out that over the last five years we've had a number of
these events and that small business minority firms who are
interested in the program just contact SBA's District Office.
Ms. Johnson. We appreciate that so very much. I want you to
be mindful that it is very difficult to get to from Dallas, and
it's about 300 and some miles. So, we would have to, while we
appreciate that and want to keep going, it's 50 miles from
Houston which is over 300 miles from here.
We need something up around the University of Texas-
Arlington, University of Texas-Dallas, so that the north Texas
end of the State would have access to that kind of assistance.
Chairman Smith. Let me just say for the record, that last
comment was by Victor Klingelhofer, the Associate Deputy
Administrator for the Office of Government Contracting and
Business Development for SBA.
Mr. Alexander. Congresswoman Johnson.
Ms. Johnson. Yes.
Mr. Alexander. On May the 11th, the Small Business
Development Center here is going to be sponsoring an event. So,
that's an opportunity that we will provide additional training,
right here in the local area.
Ms. Johnson. Thank you very much. This is a very
resourceful area right here where we are, that's why I chose
this to be a site.
Chairman Smith. I think for Dr. Slocum the time is about
up, and I, but what I would like to do is just briefly, maybe
in 30 or 45 seconds, any additional comments any of you would
like to make, starting with you, Dr., well, starting at either
end.
Mr. Montes. Nothing here, I'll yield to my colleague.
Ms. Goodnight. I would just encourage the contact, there's
a lot of entrepreneurial ideas and talent in this state, across
our entire country, and I want to see that momentum continue.
Dr. Slocum. I would just like to say a personal word of
thanks for this program.
Dr. Murphy. I'd just like to reiterate that last comment.
Thank you.
Chairman Smith. Well, and thank you, excellent testimony,
and it does take a lot of time, and a lot of work, and a lot of
effort, so we appreciate all of you, not only being here, but
working and developing on the testimony.
I would like to leave the record open and would ask for
your consideration on answering in writing any follow-up
questions that the staff may have, that our Vice Chairman may
have, or that I may have.
And, with that.
Ms. Johnson. No, no, don't close yet.
Chairman Smith. No, no, don't close yet.
Ms. Johnson. We would close this portion, but what I'd like
to do is pass out the cards so that the audience can write any
questions that they might have, and if we can't get them
answered in the next 15 minutes we'll take them back with us
and make sure they get answered.
So, if you will write your name and address on the back of
the card where you have a question, we'll make sure that we get
the answers to you.
Chairman Smith. And, with that, the hearing is concluded.
[Whereupon, at 11:30 a.m., the Committee was adjourned.]